Why AMD Shares Advanced

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Advanced Micro Devices (NYSE: AMD  ) advanced by as much as 12% today on hopes  that its largest investor would help support the company if it needs to.

So what: Williams Financial Group analyst Cody Acree said that there is a good chance that Mubadala Development Co. would help provide financial support to the struggling chipmaker if AMD ran short on cash. Mubadala currently has an approximately 19% stake (including warrants) in the company, and it added another board seat in November.

Now what: Acree alluded to Mubadala as a "lender of last resort," implying that the investor would have little choice but to bail out AMD if it came down to it. AMD also said last week that it was planning on selling its facilities in Austin, Texas, to improve its cash position. Shares have been under heavy pressure in recent weeks, so a little bit of bullishness goes a long way toward sparking a rebound rally.

Interested in more info on Advanced Micro Devices? Add it to your watchlist by clicking here.


Read/Post Comments (2) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 03, 2012, at 6:48 PM, TEBuddy wrote:

    I've seen nothing new to suggest this is the case. I do not disagree with it, but its been that way since, say 2009! ATIC's recent addition to the board and increased position only solified that thought. But this is not news, its old info, perhaps others are just catching up.

    I am pretty sure this has more to do with option buys and covering shorts. Volume was really high today.

    I don't see AMD even needing a cash infusion from ATIC or Mubadala, but they are there, and it is comforting to have dedicated semiconductor backers. AMD has made it through a recession, their products are good, and thier performance relative to competition is expected to improve in 2013. AMD's biggest problem has actually been ATIC, or rather their founries that they bought from AMD. It was production issues that have put AMD in this precarious situation and has been bleeding AMD of cash.

    From the outside, this issue at GF seems to have improved. GF is even collaborating with IBM (once and AMD partner) on 20nm production. IBM may outsource some production to GF. Lets just hope the 28nm line is receiving enough attention and those parts are released to OEMs by 2H13.

  • Report this Comment On December 03, 2012, at 10:33 PM, rav55 wrote:

    AMD needs the financial stability that Mubadala brings to the table, especially so that AMD will providing APU's and gpu's for a three major game consoles. This is a 6 year product run probably with the same cores with maybe a revision or two along the way. In other words with process maturation comes high yields and profit.

    Also a 19% stake is well on the way toward private ownership.

    AMD next year will be the ONLY ARM and x86 on die APU designer. What that means is even Intel will not have that market penetration.

    Intel also can not build on die graphics without stepping on AMD and nVidia 3d patents. Oh yes there is a cross license agreement between nVidia and Intel but that is only for the Sandy and Ivy Bridge environment and it ends in 4 years. And yes Intel did acquire ZiiLabs from Creative Technology but to integrate those patents into a road map will yield a first gen Intel APU MAYBE in 3 years. In the meantime AMD will be working on what 5 or 6 gen APU? And nVidia still has diddly squat.

    That means that Intel will again have nothing to offer the $100 billion dollar console gaming industry. Of course who knows what console gaming will look like in 5 years.

    But AMD has dual precison teraflop coming up and in 5 years that will be old news and likely on-die if AMD's current design practice holds.

    Mubadala is a huge insider play. It appears that they are slowly acquiring and retiring AMD stock.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2137371, ~/Articles/ArticleHandler.aspx, 10/23/2014 12:04:55 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement