AMD Vote Fails For Fab-Lite Move, For Now (AMD, INTC)

Advanced Micro Devices Inc. (NYSE: AMD) may end up getting stuck with its manufacturing operations.  Its plan to become “fab-lite” has been delayed because it did not win enough shareholder support.

The company failed to win majority shareholder approval for a spin-off of its manufacturing facilities.  This will essentially delay the process a week (or more) so that more investors can respond to the plan.  The process has been delayed until February 18.

It appears that only 42% of eligible voters responded, below the majority vote needed to spin off the manufacturing operations.  It appears that AMD’s “The Foundry Company” won’t become independent.

Advanced Technology Investment, associated with the government of Abu Dhabi, will co-own the company with AMD.  The aim is to bolster AMD’s balance sheet via an $800 million infusion and a shift of some $1.2 billion debt away from AMD’s books.

The vote is the last major condition upon this process from what we have been able to see.  We think that this will ultimately get approved.  But…

We aren’t sold that it will resolve the company’s problem.  This move will free up significant operating capital, but AMD seems so far behind Intel because of its problems.  Dirk Meyer became CEO just as the bottom dropped out of technology spending.

This may just put off the hangman a little while longer.  Shares are down about 6% at $2.21 today.

Jon C. Ogg
February 10, 2009