Advanced Micro Devices' Ratings Placed on S&PWatch, Negative
NEW YORK, March 5 /PRNewswire/ -- Standard & Poor's today placed its double-'B'-minus corporate credit rating on Advanced Micro Devices Inc. (AMD) on CreditWatch with negative implications. A double-'B'-minus/single-'B' rating is assigned to the company's $1 billion mixed shelf registration, which is also placed on CreditWatch with negative implications. The company's double-'B'-minus bank loan rating and double-'B'-minus rating on AMD's $400 million senior notes are also placed on CreditWatch with negative implications.
The CreditWatch listing reflects increasing concerns about AMD's ability to profitably manufacture its ''K6'' microprocessor, as well as longer term concerns about the company's capability to develop and market successor processors in an increasingly competitive market.
Sunnyvale, Calif.-based AMD has experienced persistently disappointing manufacturing performance in its microprocessor business, particularly for higher speed products, despite expectations that manufacturing problems had been addressed. Furthermore, marketplace pressures in the sub-$1000 personal computer segment, where AMD focuses its efforts, have increased. The company now anticipates that its March 1998 quarter revenues will be significantly lower than it had reported in the December 1997 quarter, and that its net losses will be greater. At the same time, the company will also continue to invest heavily in manufacturing capacity. Expenditures totaled $685 million in 1997 and are expected to be significantly higher this year. Resulting cash flows in 1998 could be substantially below the $300 million negative free cash flow reported in 1997.
Standard & Poor's will assess AMD's manufacturing and product development prospects, and their likely effect on profitability and cash flow measures. -- CreditWire |
