Reading this article makes a little more sense than the sky is falling. Should there be a big drop tomorrow I will be shopping for calls (I said the same thing last week) AMD's Financing Moves Leave it in Better Shape to Battle Intel and Nvidia By replacing high-interest debt with stock and convertible debt, AMD will dilute shareholders. But it'll also be in better position to invest in new products. With shares up 156% on the year, AMD (AMD) is looking to swap a chunk of its large debt load for stock and convertible debt. The move will dilute shareholders, but also significantly strengthen AMD's balance sheet as it goes after Intel (INTC) , Nvidia (NVDA) and others in a slew of big markets. The chipmaker announced after the close it's selling $600 million worth of common stock and $450 million worth of convertible senior notes due 2026 through public offerings. Net proceeds are expected to total $1.02 billion, and will be used to pay down existing debt and credit facility borrowings. As of the time of this article, AMD was down about 4% after hours. Assuming shares are sold near current levels, the stock portion of AMD's offerings will increase the company's share count by more than 10%. The convertible debt brings the potential for additional dilution, should AMD's shares surpass the price at which buyers are able to convert their debt into stock. The benefit to AMD: The offerings should allow the company to remove $1.02 billion in high-interest debt from its balance sheet. About $600 million in debt will be removed outright, and the rest will be replaced with convertible debt that (while carrying the potential for further dilution) should sport a low interest rate. AMD had over $2.2 billion in debt at the end of June, partly offset by $957 million in cash. Over $2 billion of the debt carried interest rates ranging from 6.75% to 7.75%; the remainder consisted of a revolving credit line. The financing moves will leave AMD, which has significantly cut its R&D spend in recent years as it tried to pare its substantial losses, in better shape to increase its spending while simultaneously competing in the PC CPU, server CPU, GPU and console processor markets. That's a tall order, even after accounting for the company's recent progress. AMD is just months away from launching the first chips based on its Zen architecture, which should put it on better footing against Intel in the PC and server CPU markets than it has been in a long time. Meanwhile, AMD wants to challenge Nvidia's dominance of the high-end PC GPU market next year by launching chips based on its next-gen Vega architecture, and to have succeeded in 2018 by an architecture codenamed Navi. The company is still also going after the budding ARM server CPU market, and presumably wants to remain Microsoft and Sony's console processor supplier in the years to come. Doing all of this is bound to be costly, at least if AMD wants a real chance at success. For a price, the company's stock and convertible offerings give it more breathing room to absorb near-term losses as it tries to bolster its long-term competitive position. https://www.thestreet.com/story/136...-intel-and-nvidia.html?puc=yahoo&cm_ven=YAHOO
About a year ago, I heard an idea to buy AMD bonds; but I don't know anything about bonds. Is AMD buying back their short-term bonds here? The thinking was that AMD bonds had high yield, but the company had put their issues in the past so those bonds were safe investments.
It may very well be bonds as the 7.5% interest rate on the bonds match the debt in the article. That would be a nice rate to have if you were a bond holder
Already over 13.5M volume not even 30 min into the day. I would think that those who wanted out probably already are.
It appears buyers are starting to trickle in as I am seeing a little short covering. Let's see if this can continue
Moody's affirms Caa1 CFR and Caa2 senior unsecured rating; revises Advanced Micro Devices' outlook to positive Global Credit Research - 07 Sep 2016 New York, September 07, 2016 -- Moody's Investors Service, ("Moody's") affirms Advanced Micro Devices, Inc.'s ("AMD") Caa1 corporate family rating and the Caa2 rating on the senior unsecured notes, and revised the rating outlook to positive from negative. The speculative grade liquidity rating is upgraded to SGL-2 from SGL-3. The positive outlook reflects AMD's prospects for improved operating performance and cash generation as well as the improved product portfolio enabling the company to compete in the current discrete GPUs (graphics processing unit), APUs (application process units), x86 and ARM CPUs (central processing unit) market. Although we expect ongoing revenue declines and operating losses in its PC-related business (microprocessors and graphics chips), the growing EESC (enterprise, embedded, and semi-custom) business supported by the reported design wins, we project break even to modest profitability beginning in the second half of 2016. Read more: https://www.moodys.com/research/Moo...a2-senior-unsecured-rating-revises--PR_354675
Needless to say that AMD got hit hard and heavy by the shorts on very strong volume. With that I bought the $8 October 7th calls. I left a little in the kitty incase they want to pursue the push More powerful PlayStation 4 Pro revealed with 4K support, AMD's new Polaris graphics http://www.pcworld.com/article/3117...ith-4k-support-amds-new-polaris-graphics.html
How long have you been long? If you have been in for a while, its always good to sell on the spikes higher and lock in some profits. Today's news is obviously weighing heavy on the stock, so it really depends on what your time frame and risk tolerance is. Advanced Micro Devices Inc. AMD recently announced its plans to commence a public offering of $600 million of common stock and $450 million convertible senior notes due 2026. Additionally, AMD expects to grant a 30-day option to the underwriters to purchase up to $90 million additional shares at the public offering price and up to $67.5 million principal amount of additional convertible senior notes. The company intends to use the net proceeds of $1,020 million from the offerings to repay its borrowings under its credit facility or to purchase its outstanding senior notes. The remaining amount can be used to call any or all of the untendered 7.75% senior notes due 2020. It can also be used for capital expenditures, working capital and other general corporate purposes.
I jumped in when it was around $4.80. I went ahead and unloaded and took my profit. I will look for another entry point around $6 or lower.
Reading the fine print the public offering and the convertible senior notes are a good thing by propping up the balance sheet, saving 50 mil a year and getting a upgrade from Moody's to stable. Now AMD can up their game against NVDA and INTC. This has been a huge short attack but it will subside when the big boys decide the time is right to dive in Time to sell...Sell at the upper BB not the bottom band...TTT
