Is Advanced Micro Devices Raising More Cash? (AMD)

Advanced Micro Devices, Inc. (NYSE: AMD) is far from having its woes behind it.  Shares have slid from over $7.80 just two days ago down to $7.25 shortly after the open today. 

There is speculation in the market that the Mubadala Development Company, funded by the government’s sovereign wealth fund of the Emirate of Abu Dhabi, will increase its investment in Advanced Micro Devices.  Until we get any confirmation or refuting notes, we’ll treat this as a rumor or hearsay for now.

The firm invested already infused AMD with a large chunk of change at the end of 2007, and this was an investment that did not go without criticism and did not go without controversy.  As of March 31, AMD had in excess of $1.75 Billion between its cash and equivalents and its total liabilities were listed as $8.57 Billion.

Many shareholders supposedly felt slighted that they were not given an opportunity to invest extra funds into the company.  If Hector Ruiz doesn’t want to irritate his shareholders that have stuck by the company for much longer than Abu Dhabi’s investment, perhaps he should consider an institutional rights offering to all of its larger shareholders.  It might not be a cure, but it might go without any extra controversy or criticism.

Whether or not the company even needs a portion of the amounts being tossed around is a subject that varies from source to source.  To us it seems like it isn’t exactly necessary right now if the company can gets its earnings and revenues anywhere close to where Ruiz projected…..  But after all, we are talking about AMD.

Jon C. Ogg
June 19, 2008