In a statement released today, Advanced Micro Devices, Inc. (NYSE:AMD) is considering a plan to raise money from debt markets, for a number of its projects. Advanced Micro Devices, Inc. (NYSE:AMD), a chip designer and peddler would raise around $300m in senior notes, due in 2022.
Some of the funds raised from debt market will be used by the company to repay all, or at least some of its 5.75 per cent convertible senior notes due this month, or it could also prepay similar 6 per cent notes due in 2015. Advanced Micro Devices, Inc. (NYSE:AMD) could also use the funds to make cash payments under a revised chip production agreement with GlobalFoundries, back in March. A revised agreement was needed, because Advanced Micro Devices, Inc. (NYSE:AMD) was not happy with the problems that GlobalFoundries was facing with the 32 nanometer process ramp for Opteron server processors, and with its 28 nanometer ramp for Fusion hybrid CPU-GPU chips.
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The Texan rival to Intel Corporation (NASDAQ:INTC) in the x 86 processor markets and to Nvidia in graphics processors, also plans to use the funds for acquisitions. AMD acquired microserver and interconnect upstart, SeaMicro, in Febuary this year for $334m, to help it in revising server business. Other possible targets for AMD could be Calxeda, the upstart ARM server processor maker. Applied Micro Circuits could also be a potential target, as it is working on a multi-core, 64-bit ARMv8 processor for servers. But the problem with acquiring Applied Micro Circuits Corporation (NASDAQ:AMCC) is that it won’t come cheap, as it is already a public company, which has around $230m a year in revenue, and enjoys a market cap of around $366m. So, if AMD wants to foray into segments like the embedded processor biz, or ARM processors for servers, it should be able to buy Applied Micro with half a billion dollars or so.
According to its filing with US Securities and Exchange Commission, in its balance sheet it has a $485m short-term debt and $1.51bn in long-term debt, both excluding capital leases. On its assets side, it has over $1bn in cash and another $564m in securities, so it still needs another $418m to pay off debts.
Just a few weeks back AMD posted a decline of 11 percent in revenues for the second quarter of 2012, when compared to the last quarter, Revenues were down even when compared with the same quarter last year. Net income for the quarter was $37m with earnings per share of 5¢.
AMD president and CEO Rory Read warned, “We expect headwinds will continue in the third quarter.”