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AMD stock rose on Monday in response to LBO rumors, but then fell on Tuesday

Shares of AMD rose on Monday amidst rumors of a leveraged buyout. AMD shares were up 74 cents, or 5 percent, at $15.43 in yesterday’s morning trading on the New York Stock Exchange. AMD has traded between $14.43 and $42.70 over the last year.

“It wouldn't surprise me if there was some sort of 'creative solution' in the works to help (strengthen) AMD's balance sheet,” said FTN Midwest Securities analyst JoAnne Feeney to the AP. “They took on a fair amount of debt for the ATI acquisition, and clearly AMD needs to do something about its balance sheet.”

"When they acquired ATI, they had to borrow quite a lot to finance that purchase and that's created a higher debt-to-capital ratio than they had in the past. It's still in that squeeze,” Feeney said to Reuters.

“The volume in AMD March calls have been abnormally high,” said Steve Sosnick, equity risk manager at Timber Hill and common source for M&A commentary. “There are rumors of a private equity buyout. At least in the near term, the options market is giving some credence to these rumors.”

While the analysts quoted by the recent news agencies reports seem to think that such a buyout is possible, another Wall Street analyst, American Technology Research's Doug Freedman, said earlier this month that AMD would be an unattractive candidate for private equity firms due to the company’s struggling cash flow from its price war with Intel.

In related news, FTN Midwest today cut its stock rating for AMD from a “buy” to a “neutral,” citing that the Sunnyvale company could be facing increased competition if Intel is able to deliver its 45nm product ahead of schedule. Analysts believe that AMD would have to cut prices even further to avoid further losses of market share, and may not recover until mid-2008.

Shares of AMD current sit down nearly 4 percent at $15.06.

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This is not new
By crystal clear on 2/28/2007 2:27:59 AM , Rating: 2
I had made a comment on this sometime ago, & ofcourse some
dumb idiots voted it down.
Read on-

RE: AMD cash-flow warning
By crystal clear on 2/18/07, Rating: -1
By crystal clear on 2/18/2007 5:04:44 AM , Rating: -1


"When we polled clients as to the reason behind (the strength in the stock in Wednesday's trading) we were told that private equity rumors were circulating," Freedman wrote in a note to investors. While we do not doubt that private equity is sitting on cash ... we have a hard time seeing how it would get involved in AMD at the present valuation."

Shares of AMD closed up 2.4 percent at $14.95 in Wednesday's trading.

Freedman also speculated that Michael Dell's recent return to Dell Inc. as chief executive may not bode well for AMD, since he has a strong relationship with chip maker Intel Corp.

"We advise investors to limit their exposure to AMD shares until cash is raised and new product benchmarks are made available," Freedman added.


AMD cash-flow warning
By crystal clear on 2/18/07, Rating: 2
By crystal clear on 2/18/2007 4:37:30 AM , Rating: 2

"Analyst sounds AMD cash-flow warning"

A US analyst has expressed "increasing concerns" that AMD is heading toward a cash-flow crisis even a shareholders' ears prick to whispers that a private equity company is looking to buy a stake in the chip maker - or even the whole kit and kaboodle.

AMD's cash flow was questioned yesterday by American Technology Research analyst Doug Freeman, who told the firm's investor customers: "We were surprised to see AMD shares rally yesterday given what we believe to be increasing concerns about cash flow at the company... we think management will be forced to come to the capital markets for operating cash before the end of the summer."

RE: This is not new
By Viditor on 3/1/2007 11:42:49 AM , Rating: 2
I had made a comment on this sometime ago, & ofcourse some

I didn't vote it down, but I probably would have...
This is the warnings of a single analyst who is probably short AMD...I don't give it a lot of weight.

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