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AMD receives some much needed cash from the Middle East

Things haven't been going AMD's way ever since the acquisition of ATI Technologies in 2006. The company has been assaulted by Intel's Core-based processors in the desktop, server and notebook markets and its graphics offerings still are outgunned by NVIDIA -- even with the newly introduced Radeon HD 3870 and HD 3850.

As a result, the Sunnyvale, California-based company has been taking a beating as most recently observed in its Q3 2007 earnings report. AMD recorded a $226 million USD operating loss and $396 million USD net loss on revenue of $1.632 billion USD. $78 million USD of the loss was attributed to AMD's ATI acquisition.

However, things may finally be looking up for the company. Mubadala Development Company, a United Arab Emirates (UAE) government-funded investment firm based in Abu Dhabi, has acquired an 8.1 percent stake in AMD for $622 million USD. The company received 49 million shares at a price of $12.70. Despite the buy-in, Mubadala will not receive any board representation as a result of the deal.

AMD will receive a total of $608 million USD after repaying Mubadala $14.6 million USD in expenses. AMD plans to use the cash to invest in "research, product innovations and manufacturing excellence." The Business Review reports that some of the funds will be channeled into a $3.2 billion USD chip plant on the Luther Forest Technology Campus in Malta, NY.

"We proudly welcome Mubadala, a world-class investor, to the AMD shareholder family," said AMD Chairman and CEO Hector Ruiz. "This investment strengthens AMD’s ability to deliver customer-centric innovation and choice to the marketplace, creating greater value for all of our shareholders."

For its part, Mubadala's CEO and Managing Director, Khaldoon Khalifa Al Mubarak, added "AMD is a great fit for Mubadala's investment approach -- a spirited competitor and innovator led by a strong and visionary management team. We see significant opportunities for long-term growth and value creation."

Mubadala has been spreading money around quite frequently in recent months. According to Bloomberg, the investment firm captured a 7.5 percent stake ($1.35 billion USD) in the Caryle Group. Some of Mubadala's other investments include Ferrari SpA and SR Technics.

The investment from Mubadala couldn’t have come at a better time for AMD. AMD has faced an incredible amount of debt and not only record losses in Q3 as previously mentioned, but also during Q1 and Q2. The company has also seen the departure of two former ATI executives -- CEO and President David Orton and vice president of worldwide sales Rick Hegberg, as well as executive vice president and chief sales and marketing officer Henri Richard.



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By FITCamaro on 11/16/2007 3:41:58 PM , Rating: 4
It wasn't just for that. The main reason was because they needed a complete solution to get into the OEM space more. AMD relied on chipsets from third parties for far too long. OEMs want a tried, tested, and true solution. With their acquisition of ATI, AMD got that.

And it has paid off. They are now a much wider partner in the OEM space than ever before. AMD's biggest problem as been price wars with Intel. It's been great for us consumers but hell on them. I mean you can buy a dual core processor now for less money than a good air cooler. And which do you think costs more to produce?

AMD will hopefully eventually come back. Their chips though are still an incredible value. I built a system for my parents recently at an incredibly low cost. I paid $125 for my 3800+ back in like June. I got them a 4200+ for like $70-75.


By theapparition on 11/18/2007 12:52:24 PM , Rating: 3
quote:
I mean you can buy a dual core processor now for less money than a good air cooler. And which do you think costs more to produce?

LOL, actually, the air cooler costs far more to make than the processor.

But it doesn't take billions of R&D and fab costs to make aluminum extrusions and plastic fans. Just some more useless information for nobody to do anything with. :P


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