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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 bryanW1995 on 11/16/2007 6:02:00 PM , Rating: 2
go read anand's blog and his articles on 38x0. ati just went from the anchor to the motor.

By boredg on 11/16/2007 6:12:45 PM , Rating: 2
Im not so sure how this will turn out, but AMD needs the money, and im sure they're happy to get it. Ive lived in Abu Dhabi in the past, and 'mubadala' isnt a very large company compared to some others in the region like the 'Al Futtaim' group which holds large stakes in a lot of different industries in the area.

By KristopherKubicki on 11/16/2007 6:57:18 PM , Rating: 2
Pricing on the 3870 and 3850 are really good -- I really think they did a good job there. Newegg went out of stock in less than a day.

By Parhel on 11/17/2007 1:30:07 AM , Rating: 2
I'm not at all disappointed with this release, which is a first for any product from ATI or AMD since the merger. In fact, I'll most likely be looking to buy one or the other early next year. After this release, I'm hopeful again that they are going to turn things around.

By clnee55 on 11/17/2007 7:03:18 PM , Rating: 2
ALways hope. Sounds like comunism. ALways hope for a brighter future.

I'm hopeful again that they are going to turn things around.

By crystal clear on 11/18/2007 12:05:37 AM , Rating: 2
Depends ! on what quantities they recvd.

"And boy have we patented it!" -- Steve Jobs, Macworld 2007

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