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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 crystal clear on 11/17/2007 5:21:06 AM , Rating: 2
AMD has borrowed heavily in the market !

1) Does AMD has the funds(revenues/sales/profit margins on CPUs) to pay back these debts ? (mentioned above).

No it does NOT have the ability to do so.

2) Does AMD have any other options besides selling additional shares & how much can you.

Its like pouring water in a bucket with a hole in it.-

There is a hole in the bucket dear Hector dear Hector dear Hector.....

If their R&D saved them by getting out Barcelona & Phenom,sadly their manufacturing has failed them due to its inability to supply the market with enough CPUs to generate those huge sales revenues.

If thats not enough those prices wars have left NO PROFIT margins on their CPUs.
I will not be surprised if it is revealed that AMD is selling at a LOSS or below COST.

To add to all the above facts-

Intel has already switched to 45nm manufacturing,enabling lower its cost & prices & increasing its profit margins + sales.

They have 12 new quad-core chips boast clock speeds ranging from 2GHz up to 3.20GHz, with front side bus speeds (FSB) up to 1600MHz, and cache sizes of 12MB. The three new dual-core chips feature clock speeds of up to 3.40GHz, an FSB of up to 1600MHz, and cache sizes of 6MB.

By the 2Q 2008 they will have all their CPUs on 45nm,whilst 65nm CPUs will be discontued.

They have already started sending out notices to their dealer about this,
Product Change Notification

Change Notification #: 108081 - 00

Change Title: Intel® Core™2 Extreme Processor X6800

and Intel® Core™2 Duo Processors E6700,

E6600, E6420, E6320 and E6300, PCN

108081-00, Product Discontinuance, Tray and
Boxed Product Discontinuance

AMD move from 65nm to 45nm will be only in 4Q 08 at the earliest if not 1Q 2009

AMD does not deliver on time is a reputation it earned in 2007.

I really wonder how those shareholders dont realize this.

"Young lady, in this house we obey the laws of thermodynamics!" -- Homer Simpson

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