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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: aleph0 who wrote (228145)	3/15/2007 10:35:50 PM
From: justaview	Read Replies (2) \| Respond to of 275872

14$ may in fact be the agreed price IMO ! No, at $14 there is no profit for the IB. The underwriting IB will be buying shares from AMD wholesale. The IB has to make a profit selling them retail. Suppose AMD doubles the float and issues additional 555 million shares. The retail price to the public would be half of today’s $14 which is $7. This is all that an IB can realistically get when selling to the public based on the dilution and the today’s price. With the underwriting discount AMD will be lucky to sell the shares to the IB for $6 per share. This will get them 555M * $6 = $3.33B. With the 50% rule, they have to prepay the $1.665B for the ATI note leaving AMD with $1.665B of additional cash. Coupled with about $1B cash on hand, $2.665B is hardly enough to build and equip the next process node, while paying for the negative cash flow from operations.