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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 227.90+2.0%Jan 15 3:59 PM EST
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To: Dan3 who wrote (228283)3/17/2007 4:41:56 PM
From: niceguy767Read Replies (1) of 275872
 
It's kinda tough for a company that is suffering financial difficulty (i.e. looking at $100M to $200M losses in each of the next 2 quarters) to find buyers of common shares to reduce its debt load and not experience some significant negative price impact on current price, i.e. $14.

The best reason for selling common is for expansion or to build a war chest for expansion. In such cases, the positive case makes some sense.

It's too late for AMD to sell the sizzle of the ATI deal and in retrospect, it looks like AMD paid about 2X what ATI was worth.

What I'm getting at is that the idea of floating a $2.5B offering of $14 common shares just doesn't fly for me given the current state of financial hardship at AMD.

Seems to me that any large investor in AMD at this point will demand something more than common shares for taking on such significant risk. I'm guessing convertible shares and with a hefty coupon rate and I wouldn't be betting on those to hold AMD at $14, once the "issue buzz" were to subside.

The re-energized level of competition from INTC combined with the current "financial pickle" that AMD finds itself in doesn't make and significant new offering, convertible or other, a slam dunk at $14 by any means.
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