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Khaldoun Khalifah Al Mubarak, CEO of Mubadala
Provides cash infusion to trim debt

Shareholders of Advanced Micro Devices have approved the financial transactions necessary for the formation of "The Foundry Company" at a second special vote in Austin, Texas. This allows AMD to spin off its fabs into a joint venture with the Advanced Technology Investment Company (ATIC), wholly owned by the Emirate of Abu Dhabi.
 
At the first special meeting on February 10, only 42% of AMD's shares were presented. This shook investor confidence in AMD's ability to close the deal, leading to a sharp drop in AMD's stock price. AMD has been criticized for not allowing enough time for shareholders to prepare and submit their votes.

There were a total of 608,725,020 outstanding shares of AMD stock on January 15, the date of record to denote those shareholders who were eligible to vote. Of that total, only 305,951,749 shares were actually registered to vote by proxy or present at this second special meeting. This means that only 50.26% of outstanding stock was actually presented, barely passing the required majority to form a quorum.

The final results were 289,045,519 shares in favor, 7,269,962 shares against, and 9,636,268 shares abstaining. 94.47% of shares presented voted in favor, but the low turnout means that only 47.48% of all outstanding shares were actually voted in favor of the deal, which is expected to close by March 2, 2009.

The approved transactions include the issue and sale of 58 million shares of AMD's common stock to West Coast Hitech (WCH), a Cayman Island based holding company. It is a wholly owned subsidiary of Mubadala Development, a sovereign wealth fund owned by the government of Abu Dhabi. WCH currently owns 8.05% of AMD due to an earlier investment. Due to rules set out by the Securities and Exchange Commission, this meant that the acquisition of the additional shares required a special vote by shareholders, which have now allowed WCH to own 16.05% of AMD when the deal closes.

A separate but related agreement sells WCH warrants to purchase an additional 35 million shares. If exercised, WCH will own 142 million shares, accounting for 19.9% of AMD on a fully diluted basis, including outstanding stock options and restricted stock units.

A point of contention was raised by an angry shareholder at the meeting, who pointed out that AMD's board of directors approved a $3,000,000 transaction bonus to Hector Ruiz, AMD's Executive Chairman.

Ruiz, who has been heavily criticized for his poor management of AMD after the departure of the legendary Jerry Sanders, will become the Chairman of The Foundry Company. His base salary will be $1,150,000 per year, but he will also be eligible for a targeted annual bonus opportunity of 200% of his base salary, with a maximum annual bonus opportunity at 400% of his base salary.

The Foundry Company will assume ownership of all AMD's fabs, in an effort to lower AMD's debt burden. The new firm will seek to compete against other foundries such as UMC (United Microelectronics Corporation), Chartered Semiconductor, and TSMC (Taiwan Semiconductor Manufacturing Company), which currently produces AMD's graphics chips.

AMD will contribute its fabs, manufacturing employees, intellectual property rights, and other related assets to the new joint venture, which will then assume $1.2 billion in debt from AMD. ATIC will invest $2.1 billion to purchase its ownership stake in The Foundry Company, of which $700 million will go directly to AMD. The other $1.4 billion will provide capital funding.

AMD and ATIC will each own 50% of the voting shares, entitling each to elect four directors of The Foundry Company. AMD will own 34.2%, with the remaining 65.8% owned by ATIC, which may see its ownership increase over time based on future capital infusions of up to $6 billion.

The details of the entire deal can be found in AMD's 433 page proxy statement here.



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Ruiz's Salary
By yomamafor1 on 2/18/2009 6:18:24 PM , Rating: 5
Ruiz, who has been heavily criticized for his poor management of AMD after the departure of the legendary Jerry Sanders, will become the Chairman of The Foundry Company. His base salary will be $1,150,000 per year, but he will also be eligible for a targeted annual bonus opportunity of 200% of his base salary, with a maximum annual bonus opportunity at 400% of his base salary.

So after all of the mismanagement (K10) as well as unclear directive for AMD during his tenure, which practically ran AMD from a 8.4B company to 1.34B + 5B of debt, he's given more base salary (1.15M vs. 0.95M), and more bonuses and options.

What a wonderful world.




RE: Ruiz's Salary
By crystal clear on 2/18/2009 8:05:04 PM , Rating: 5
Ruiz gets this as a reward from the government of Abu Dhabi for getting things done in their favour.

Its a small tip for the services rendered, like they tip the concierge at the front desk of a 5 star hotel.

Next he gets a private executive jet all paid for by them to fly around the world as he likes.

Enjoy....


RE: Ruiz's Salary
By paydirt on 2/19/2009 10:30:24 AM , Rating: 2
OK, here's the deal. We give you $5,000,000 personally, you give us your company. Thnx bu-bye.


RE: Ruiz's Salary
By SunAngel on 2/18/09, Rating: 0
RE: Ruiz's Salary
By Pryde on 2/18/2009 10:43:42 PM , Rating: 5
During the early days of producing Micro Processors problems could stop production for weeks. This disrupted the processors getting to customers. To reduce the risk of supply troubles, IBM insisted that multiple manufacturers produce the chips.

If it was not for Intel letting AMD produce there chips under the second-source agreement with IBM, then AMD would have died producing memory chips. AMD first in house x86 CPU was not produced until 1996.


RE: Ruiz's Salary
By SunAngel on 2/18/09, Rating: 0
RE: Ruiz's Salary
By sweetsauce on 2/19/2009 10:41:37 AM , Rating: 3
quote:
Had AMD won the bid, guess who we be rooting for today.
I got a better what/if scenario for you. What if my aunt was born with a penis? Then she'd be my uncle. About as relevant as your what/if scenario for AMD.


RE: Ruiz's Salary
By SunAngel on 2/19/09, Rating: 0
RE: Ruiz's Salary
By kbehrens on 2/18/2009 10:45:26 PM , Rating: 3
Buying ATI was a stupid move. Yeah, it had a bunch of positives for the future, but it dilutes their core focus and sunk them in a virtual mountain of debt. Now they have to spin off their foundry business just to stay afloat? Not good.


RE: Ruiz's Salary
By Targon on 2/19/2009 8:28:07 AM , Rating: 3
A big issue that AMD could not anticipate was what happened to the global economic problems that have been causing no end to problems. The ATI purchase has even been a GOOD thing, because the Radeon 4870 really is doing well. Yes, there was increased debt, but AMD would be having even greater problems without the income from the graphics division.

In addition to this, the work that AMD has done with process technology improvements can be applied to the graphics division, which WILL help the graphics division even more going forward. When AMD moves to that 32nm process, do you really think that NVIDIA will get there before AMD does? AMD will get a nice boost there as well.

AMD spun off their fab business to help how things look on paper, but in general, the key was to get funding. Unlike the financial and auto industries, you are not seeing AMD and Intel crying to the federal government for a bailout, because they ARE able to survive this economic climate.


RE: Ruiz's Salary
By phazers on 2/19/2009 12:12:08 PM , Rating: 3
quote:
Yes, there was increased debt, but AMD would be having even greater problems without the income from the graphics division.


To date, AMD's ATI division has made a profit in only one quarter - Q3 of last year. Last quarter it lost $10. Q3 it made $50M. The $50M didn't even cover the debt on the loan.

So your reasoning is akin to that of a guy who buys a Lexus to get into the pizza delivery business. Yeah, he made a profit one week, but ultimately got repo'ed because he couldn't make the loan payments.


RE: Ruiz's Salary
By phxfreddy on 2/18/2009 11:38:34 PM , Rating: 3
Ruiz fudged up Motorola and then left to go to AMD. One has to wonder if he has the negatives on someone. Or maybe its an affirmative action thingy. Whatever it is after Motorola I was rather shocked to hear he could even get another job.


RE: Ruiz's Salary
By LEDunk2007 on 2/19/2009 9:16:48 AM , Rating: 2
This is why companies such as ExxonMobil have decided to adopt salary schedules that scale wages so they are directly proportional to work performance.


Sorry
By kontorotsui on 2/18/2009 5:44:32 PM , Rating: 2
Sorry for not being there to vote for my 1,000 shares. I've lost enough money already on those, can't really pay also for the airplane ticket to get there.
I trust you've done the best, as you did in the last two years.




RE: Sorry
By thornburg on 2/18/2009 6:31:54 PM , Rating: 3
quote:
I've lost enough money already on those, can't really pay also for the airplane ticket to get there.


I can't decide whether that was supposed to be a joke, or you're lying about owning shares, or you're just really uninformed about your shares if you do own any.

Ever heard of ProxyVote? I've been voting by Proxyvote as a shareholder in AMD, Intel, and several other companies for years. I didn't even have to find out about it myself. The first time, I got a notice in the mail. Now I get them by email...

http://www.proxyvote.com/


RE: Sorry
By dubber on 2/18/09, Rating: -1
RE: Sorry
By kontorotsui on 2/19/2009 12:56:49 PM , Rating: 2
It's not joke, I own 1,000 shares. Well, I was a bit sarcastic in the last sentence, but that was quite obvious.

Can this Proxyvote be used even by foreign (not USA) citizens?
That website has no explanations or whatever.


fuzzy !!!!!
By GlassHouse69 on 2/18/2009 5:57:39 PM , Rating: 2
I get a warm fuzzy feeling seeing an arab in a sheet involved in my country.... it's so cute!




RE: fuzzy !!!!!
By wjobs55 on 2/18/09, Rating: -1
RE: fuzzy !!!!!
By GlassHouse69 on 2/18/2009 7:48:35 PM , Rating: 2
sux being an arab with a sheet on!


RE: fuzzy !!!!!
By wjobs55 on 2/19/2009 4:13:08 PM , Rating: 1
quote:
sux being an arab with a sheet on!


lol, so's wearing a DOUCHE-BAG on your HEAD called a BALL-CAP. Friggin DOUCHE-HEADS. Cheerios!


RE: fuzzy !!!!!
By GeorgeH on 2/18/2009 7:51:10 PM , Rating: 2
Is tying a strip of fabric around your neck really any less silly than wearing a fancy sheet?

If the choice were available to me, I'd go with a man dress over a dog collar any day of the week.


What happens to AMD stock?
By paperfist on 2/19/2009 10:12:50 AM , Rating: 2
If you already own AMD stock and the company splits like this I take it your stock remains with the design company?

I don't understand how a design company would have any stock value when it's not directly producing anything...




RE: What happens to AMD stock?
By SilentSin on 2/19/2009 10:33:41 AM , Rating: 2
quote:
I don't understand how a design company would have any stock value when it's not directly producing anything...

Ask that question to NVidia or the large majority of design firms out there who use TSMC or other large outsource fabs for their production.

I think the ability for The Foundry Company to operate outside of AMD can be a very good thing...if they are managed well. With Ruiz at the helm that should be the main point of focus for the board. If he screws up, even just a little bit, at this point they should just kick his ass to the curb. There is no room for mistakes now, especially not from him.

This deal enables The Foundry Company to operate just as TSMC, UMC, et all do and sell the extra fab capacity instead of letting it go to waste as it does today. But like I said, it depends on how they manage that extra capacity to make sure they do something profitable with it.

Also, the new 32nm fab this deal enables to be built in NY is going to be absolutely HUGE for AMD in the future, that is if they make it to that point. That fab is larger than even Intel's largest single fab IIRC, the amount of chips it could produce could enable some large revenue streams.


RE: What happens to AMD stock?
By Alpha4 on 2/26/2009 5:56:00 PM , Rating: 2
I remember when a mass of New York's population raised hell after the state granted AMD rights, AND a $650 million incentive, to construct the plant there.
Right now I bet those people are wishing the plant was constructed sooner for the sake of more jobs.


More bad math?
By mikeblas on 2/18/2009 9:14:00 PM , Rating: 2
> which have now allowed WCH to own 16.05% of AMD when the deal closes.

Is the correct figure 16.05%, or 16.10% ?




RE: More bad math?
By Pakman333 on 2/19/2009 3:04:29 AM , Rating: 2
Yes, you have bad math.

107,000,000/666,725,020=16.04859%


So it happened
By InternetGeek on 2/18/2009 9:54:36 PM , Rating: 2
AMD is officially fabless now. I hope it helps them to keep CPU prices low.

What are the options now? I'm thinking that the foundry company has access to technology that in other markets beyond CPU-making is very good.

Can they also keep their X86 license?




RE: So it happened
By Oregonian2 on 2/18/2009 10:32:28 PM , Rating: 2
Yup, that's the two hundred billion question.


Foundry Company
By LEDunk2007 on 2/19/2009 9:14:32 AM , Rating: 2
At least the fabrication facilities will be set up in Pennsylvania, where the diffusion technology will not be so readily open to industrial espionage from foreign interests. Further it goes without saying that it is time for Hector Ruiz to step down as a CEO. Perhaps the Foundry Company can find a man with the engineering experience of Dirk Meyer to replace Ruiz.

Further I expect the newly spun off Foundry Company, despite being under dysfunctional leadership, to produce a 32nm processor with at least eight cores and dual memory controllers sometime within the next year to counter Intel's Westmere configuration. If AMD is to return to its former prowess it must repeat what it did in the days of the first Opteron.




Abu Dhabi
By hameed on 2/19/2009 2:19:20 AM , Rating: 1
All your base are belong to Abu Dhabi




Too bad
By Murst on 2/18/09, Rating: -1
RE: Too bad
By yacoub on 2/18/2009 6:12:16 PM , Rating: 2
Pretty sure the Duron was around 00-01, because they arrived around the time of the Athlon (K7) (note similar naming scheme - Athlon, Duron), compared to their previous CPUs, generally known simply as K6.


RE: Too bad
By Murst on 2/18/2009 6:18:25 PM , Rating: 2
quote:
Pretty sure the Duron was around 00-01

You're right, just checked wiki and Duron was released in 2000. I guess it was my 2nd AMD chip then ( I know I build an AMD system prior to going to college ).


RE: Too bad
By Beno on 2/18/09, Rating: -1
RE: Too bad
By amanojaku on 2/18/2009 7:52:42 PM , Rating: 4
I love how you censored d1ck, but wrote sh1t. :)


RE: Too bad
By Beno on 2/18/09, Rating: -1
RE: Too bad
By chizow on 2/18/2009 8:21:05 PM , Rating: 2
What'd you expect? They love their Counter Strike and pr0n as much as the next guy.

Not kidding about that either, remember some internet study that showed the Middle East was one of the biggest black holes on the planet for internet pr0n. Online gaming and internet cafes are also huge over there, anyone who's into MMOs knows what I'm talking about.


RE: Too bad
By chizow on 2/18/2009 8:22:28 PM , Rating: 2
oops this was in reply to the "Fuzzy" comment.


RE: Too bad
By JS on 2/18/2009 10:45:21 PM , Rating: 2
quote:
We already send enough money to countries where people do not consider us their friends.


Since when is Abu Dhabi hostile towards the US? Or is it just that they guy on the picture fits your stereotype of a terrorist? Get a clue, please.


RE: Too bad
By Murst on 2/19/2009 11:50:00 AM , Rating: 2
You ( along w/ a lot of other people responding to my comment ) seem to want to make this about religion or race for some reason. I would have the same issue if AMD was selling to Venezuela.


RE: Too bad
By Amiga500 on 2/19/09, Rating: 0
RE: Too bad
By Murloc on 2/19/2009 7:37:19 AM , Rating: 2
stop using your car, the gas you use comes from these countries.


RE: Too bad
By Hexxx on 2/19/2009 8:35:57 AM , Rating: 2
The UAE is actually the largest place of service for US military ships outside of the US (being in the Gulf). They are a key ally and most definitely considered a friend to the US. You should really try get out more or read or something.

If you're still confused, Dubai is a city in the UAE.


RE: Too bad
By Murst on 2/19/2009 11:33:09 AM , Rating: 2
quote:
They are a key ally and most definitely considered a friend to the US

The only reason we consider them a "friend" is because we need someone who is not hostile to us in that region. The only reason they are not hostile to us is because of the money and military equipment they receive from our government.

If you think that this friendship is anything other than money and weapons, you're seriously wrong. Our countries share very few values. Their treatment of foreign workers ( who make up the majority of their work force ) is basically slavery. UAE is continuesly cited for women's rights issues.

I have family who's lived in the UAE. They worked for the US government ( in the US embassy ) and were under constant lockdowns due to security. Even when there was no lockdown, they needed to be extremely careful because of fear for their own or their children's lives. And you think this country is a friend of ours? I suggest you read up some more or "try to get out". If you can't, then try to find someone who's actually lived there.


"I'm an Internet expert too. It's all right to wire the industrial zone only, but there are many problems if other regions of the North are wired." -- North Korean Supreme Commander Kim Jong-il

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