Brilliant! Once again AMD manages to surprise by dilluting the company. No hope.

I love ATI and AMD products BUT why?? AMD is already over-extending themselves in terms of buying power. I know AMD wants to go private but dude...they spent their friggin money on ATI??????????

AMD...Do us a favor.....please...PLEASE focus on your product offering...don't worry about the other guys

Darkk

Are there seriously going to be people buying these notes? Why? If the people think that AMD is going to turn things around, they might as well purchase the stock at the price it is at now... or buy LEAP options...

This whole thing is like a giant financial pyramid scheme. Debt to pay debt? I wonder what the terms are on these notes and if people (institutions) are really this gullible.... It does seem to fit nicely into the whole "60Bil monopoly profit" report and yet another analyst day paper roadmap though... What an amazing "coincidence" in timing, eh?

Almost as bad as last year's "everything's on track" at analyst day --> great we got the loan --> oh by the way we are not so on track with revenue and we may lose, say $600mil in Q1, my bad on the previous forecast, but thanks for the favorable loan terms though! And we may have stuffed the channel to artificially inflate the Q4'06 #'s.... See you in 6 months!

PT Barnum was right...

Signed TeaserCreditCardOffer - now that's brilliant!

On a side note, AMD is looking to help out some children in third world countries. They can assure every dollar you donate gets through - all you have to do is send them your bank account # and PIN via email and they can make sure the money gets to the "right place". The reason they want your PIN and account info is so there is no extra overhead in the donation process.

And if you believe that one, I think they may have some senior convertible notes they're selling! :)

To pay for a new system in 20K range? I'm not quite sure how to do it but it sounds like free money. How does that work? Do I need to go a few Hundred Million in debt first? Maybe I should try to buy AMD, go into major debt, then offer notes to get my 20K system. I'll even use Barcy cores if that sweetens the pot.

Anybody smelling the same stink here? Another massive dilution event diluting even the prior CBs...so what's to ensure that the prospective lenders won't be diluted out as well in future? Nothing. That means the cost for these new CBs will be even more exorbitant.

And the game goes on...as soon as they lend out the money they short amd for the full amount to limit their downside. Spiral of death.

How many of you really know about "convertible senior notes".

All i can see is bashing of AMD. BUT financial "expert" can only explain what does it mean.

This is NOT IT issue than financial and if AMD is (and it is) in financial problems than i hope they are doing the best they can.

Anyway i can't say if that move is good or not.

And yes i agree that AMD need to produce good processor and good graphic card because convertible senior notes wont save them. But if convertible senior notes can help them to build one than go for it AMD

with donations, they are for tax credit purposes LOL.

Why else would AMD have to do this? It is as simple as that. AMD likely got downgraded in its ability to pay back the loan based on the initial terms. So AMD is doing what it has to (diluting shares once again) so it can hopefully scrape by.
Keep on slapping your shareholders in the face, AMD...

Shouldn't the Morgan Stanley loan in the article be $2.5 Billion, not $2.5 million? No one would be complaining if AMD owed them only so little...

[you are correct. thanks for the note -ed]

This is kind of like borrowing on one credit card to pay the interest on another credit card. Net result: debt.

Time to start selling assets, boys.

Brilliant!
They will release “convertible senior notes” to pay lawyers to fight Intel…. The problem is lawyers can not buy Convertible Cars for these “convertible notes”, and might be this is a problem…

This amounts to a refinance. This puts AMD in control of its debt and not Morgan Stanley. They offer the debt to the market directly at a better rate rather than go through a bank.

The holders of the note get interest - I think in this case it is 5.75% (if I remember correctly). They also have the option at a later date to convert the note into stock if the stock hits a certain price (I think the strike on the previous note issue was in the high 30'3/40's price range). If the stock never gets to that level than they can't convert to stock (I'm not sure whether the note expires eventually and if the holder is then out of luck with their initial investment). So basically this is another form of loan, which can potentially be converted to stock.

The main benefit for AMD is they now can start a firesale on assets if they wish - by terms of the MS loan, proceeds from any sale of assets would have mainly gone to paying down the loan and thus would not have helped them in raising cash. This is not the case with convertible notes, so now AMD is free to sell off land, other assets, or business units to raise working cash (if they wish).

I would expect this to happen if there is another potential cash crunch (which by some analysts estimation will occur again in H1'08). I would expect portions of some of the ATI business units to go in the Q4'07 timeframe, and perhaps sale of the rest of their Spansion stock unless Q3 and Q4 results have upside surprise.

This is a bit simplified and not probably a 100% technically correct explanation but I hope this helps...the paragraph above is obviously speculation on my part.

Are you an analyst covering AMD?

No, but I do follow the stock market closely and invest (I'm an engineer by trade). I wouldn't touch AMD stock - it could be too much of a crapshoot in either direction.

It's not often, but it happens sometimes here that after numerous pointless, ignorant, and plain stupid comments(15 here), you finally get 1(!) that actually knows what the article is about. If people were doing search before they comment, the world would have been a better place.

My company was a lender in the MS loan. It has been almost a year since the loan was booked, so I don't remember all the specifics. However, secured loans in general put many restrictions on a company other than limiting asset sales or directing asset sales cash to loan repayment. One common restriction are basket limitation on investments, which allow only so much money over the loan life to be permitted for strategic equity purchases. Overall, with the rumors that they might go fabless or largely fabless, which I believe to be the case (on my own.. and no, I do not have any insider knowledge other than what is released), I think this move by them is a good call. For instance, removing the loan would allow them to sell a plant for $X and use that cash to invest in fabless company, which would guarantee them a specific amount of capacity a year. I wish them the best and I am sad to see a nice funded term loan paid off so early.