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November 18, 2009
AMD takes steps to reduce debt
Advanced Micro Devices Inc. is using its $1.25 billion lawsuit settlement with Intel Corp. to reduce its debt. The news sent its shares up almost 6 percent in early trading, to $6.95.
The chipmaker announced two tender offers designed to reduce its debt that matures in 2012.
Last week, AMD announced the settlement of its four-year antitrust lawsuit against rival Intel Corp., which included Intel paying AMD $1.25 billion and change some of its business practices.
AMD will use cash to redeem and retire about $390 million in 7.75 percent high-yield debt due in 2012.
It also will use cash and a new private debt offering of $500 million of senior notes to make tender offers for up to $1 billion on the $1.5 billion of 5.75 percent convertible notes due in 2012.
Depending upon the total amount of convertible notes tendered, the company could reduce its total debt by $890 million and lower the debt due in 2012 to $485 million.
Before these tender offers, the company’s combined long-term debt was nearly $3.7 billion.
Meanwhile, the MarketWatch Web site quotes a Barclays analyst as saying AMD’s next move could be to fully spin off its manufacturing affiliate, GlobalFoundries Inc., as an independent company.
The spinoff began in February, but AMD remains a minority shareholder in the company, which is mostly owned by an Abu Dhabi-based investment company.
A completed spinoff, said Barclays analyst Tim Luke, would make the core AMD, which designs and sells processors and graphics chips, a more financially sound company.
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November 4, 2009
NY attorney general sues Intel over antitrust claims
New York Attorney General Andrew Cuomo has filed a lawsuit charging that Intel Corp. illegally abused its dominance in the chip industry in an effort to thwart gains by Advanced Micro Devices Inc.
Intel already faces an AMD antitrust lawsuit in the United States, antitrust investigations by governments in Asia and a proposed $1.5 billion fine by the European Commission over its actions.
The Cuomo lawsuit covers similar ground as the other cases, alleging that Intel offered payments or pressured companies such as Dell Inc. if they agreed to choose Intel chips over AMD’s.
The complaint alleges that Intel paid Dell billions of dollars in order to keep the company from putting AMD chips in its computers.
Dell began offering AMD chips in 2006. “We do provide customer choice,” Dell spokesman David Frink said Wednesday. “We work both with Intel and AMD.” Regarding the lawsuit, Frink said “We’re not going to have any comment on the allegations against Intel.”
According to the complaint, Dell received $6 billion in Intel “rebates” between February 2002 and January 2007. The payments were couched as legitimate discounts to meet AMD price offers.
An internal Dell document cited in the lawsuit said the payments had been called “a monogamy tax for Intel.”
The complaint says that Intel threatened Dell if it started to use AMD chips, as it periodically considered doing.
In 2002, then-CEO Kevin Rollins told Chairman Michael Dell that Intel was willing “to do whatever it takes” to keep Dell out of the AMD camp, the lawsuit says.
In 2005, however, Michael Dell told Intel CEO Paul Otellini that the computer maker was losing customers by not having AMD chips. “We are losing the hearts, minds and wallets of our best customers,” he said in an email cited in the lawsuit.
The following year, Michael Dell told other Dell executives that the company would start using AMD chips “to provide the choice our customers are asking for,” according to the lawsuit.
In retaliation, the lawsuit says that Intel slashed the payments to Dell.
“Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market,” Cuomo said in a statement. “Intel’s actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices.”
Intel has denied the charges and is appealing the European Commission ruling.
The AMD lawsuit is set to go to trial early next year.
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November 2, 2009
Ruiz stepping down as GlobalFoundries chairman
Hector Ruiz, former CEO of Advanced Micro Devices and now chairman of its manufacturing joint venture, will step down in January, after taking an immediate leave of absence, the company said today.
GlobalFoundries did not explain the reason for the move. The company said Ruiz had submitted his resignation in September. It wasn’t clear why that wasn’t publicized at the time.
Ruiz was identified by The Wall Street Journal as the unnamed “AMD executive” who appears in a federal complaint that charged six people in a massive insider trading case. According to the complaint, the AMD executive told a hedge fund consultant last year details of a secret deal to spin off AMD’s manufacturing operations into a joint venture with the government of Abu Dhabi.
Ruiz has not been charged in the case, and there has been no implication that he personally profited by sharing the information.
The move ends a 30-year career in the semiconductor industry.
Technology analyst Roger Kay of Endpoint Technologies Associates Inc. said that Ruiz’ departure reduces distractions for GlobalFoundries related to the insider trading case.
“I think that is the right thing to do,” Kay said.
Besides, Kay added: “He’s done most of what he had to do. And it is clear that his chairmanship at GlobalFoundries was ceremonial.”
Ruiz’s connections around the world in the semiconductor industry are not necessary for GlobalFoundries.
GlobalFoundries did not comment beyond the release saying Ruiz would take a leave until January. Ruiz’s personal spokesman, Jeremy Fielding with the Finsbury Group, also declined to comment further.
Kay said he believes that Ruiz’s departure may have been in the works for a while - even before his name was connected to the insider trading case in Manhattan federal court.
“I’d be inclined to believe that it was actually in the works,” Kay said.
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October 27, 2009
WSJ links Hector Ruiz to insider trading case
The Wall Street Journal reported late Tuesday that Hector Ruiz, former CEO of Advanced Micro Devices Inc., has been linked to a massive federal insider trading case.
The newspaper, in its online edition, said that Ruiz was a source of confidential AMD information to Danielle Chiesi, who was one of six people charged Oct. 16 in the case involving the Galleon Group hedge fund.
The Journal cited someone familiar with the case as the source for its story. Ruiz has not been named in any public documents on the case and is not a defendant.
Drew Prairie, a spokesman for AMD, did not immediately return phone calls from the American-Statesman.
He told the Journal that the company “is continuing to evaluate the matter, and we are not aware of any allegation of criminal misconduct on the part of AMD or any current or former employee.”
The Journal said that Ruiz declined to comment on its story.
Ruiz headed AMD for seven years before resigning as CEO last July to concentrate on completing the spinoff of the company’s manufacturing operations.
He is chairman of the spinoff company, GlobalFoundries Inc., which is jointly owned by AMD and an investment company owned by the government of Abu Dhabi.
According to the federal charges, Chiesi received inside information about the proposed deal between AMD and Abu Dhabi before it became public. The charges said Chiesi then used that information on behalf of New Castle Funds, where she was a consultant, and shared it with Raj Rajaratnam, founder of the Galleon Group.
According to the Journal, Ruiz provided some of that information to Chiesi. The newspaper said he is the unnamed “AMD executive” mentioned in the federal complaint.
One of her other alleged sources was Robert Moffat, a high-ranking IBM executive who also has been charged in the case.
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October 15, 2009
AMD beats estimates with Q3 results
Advanced Micro Devices Inc. beat analysts’ estimates Thursday when it reported $1.4 billion in revenue for the third quarter.
The chipmaker, which has substantial operations in Austin, said its net loss for the quarter was $128 million, or 18 cents per share.
Analysts had estimated the company would post a loss of 42 cents a share based on sales of just under $1.3 billion for the quarter.
AMD’s product operations - design and marketing — had a small profit in the quarter, compared with a deep loss in the second quarter.
“Strong demand for our product and platform offerings combined with disciplined execution resulted in AMD product company achieving profitability in the quarter,” said CEO Dirk Meyer. “Growth in microprocessor and graphics shipments drove an 18 percent revenue increase (from the second quarter).”
The results, he added, reflected higher factory utilization rates, higher selling prices for processor chips and an increase in shipments of products made with its most advanced manufacturing processes.
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October 12, 2009
AMD shares jump on analyst upgrade
Shares of Advanced Micro Devices Inc. were up almost 6 percent today after an analyst at UBS upgraded his assessment of the stock.
Analyst Uche Orji cited “improved near-term expected growth” and evidence that a “PC market tailwind is lifting both Intel and AMD.”
He upgraded AMD from neutral to buy.
AMD shares were trading at $6.20, up 5.4 percent, on very heavy volume.
Intel Corp. reports on its third-quarter financial performance Tuesday. AMD reports Thursday.
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October 8, 2009
AMD hires new CFO
Advanced Micro Devices Inc. has hired chip industry veteran Thomas Seifert as its senior vice president and chief financial officer.
Seifert, 46, succeeds Robert Rivet, who was previously promoted to chief operations and administrative officer. He will be based in Austin.
“Thomas is a talented industry veteran with a wealth of knowledge and experience managing the operations and finances in the most difficult and competitive sectors of the semiconductor industry,” said AMD Chief Executive Dirk Meyer.
Seifert joins AMD from Qimonda AG, a German memory chip maker that was spun off from Infineon Technologies AG in 2006. Previously he was general manager of the wireline business group for Infineon.
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September 17, 2009
AMD to end temporary pay cuts
Business must be looking better at Advanced Micro Devices Inc. because the company told workers this week that it will reinstate employee pay rates in December that were reduced early in this year in the face of the economic downturn.
CEO Dirk Meyer told workers in an e-mail message this week that the pay reinstatement is coming.
AMD announced in January that it was cutting jobs and temporarily reducing pay for workers. Pay cuts ranged from 5 percent for hourly workers to as high as 20 percent for a few top executives, including Meyer.
With promising new products being introduced and the economy gaining strength, Meyer said the company remains “optimistic (about) ending the year on a profitable note.”
But Meyer told workers that AMD will continue to keep a close eye on costs for the time being.
“Neither the economy nor our business has made a full recovery,” Meyer’s note said. “We ask you to continue your tight rein on controllable spending, such as travel, catering and outside services.”
AMD has about 2,200 workers in Austin.
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August 5, 2009
GlobalFoundries to shift jobs from Austin
GlobalFoundries Inc. told Austin workers Wednesday that many of their jobs will be shifted to its new factory side in upstate New York or to its corporate headquarters in Sunnyvale, Calif., over the next year.
The company, which was spun off from Advanced Micro Devices Inc., said the latest personnel moves dovetail with its plans to become a major manufacturing partner for many of the world’s 20 largest chip companies.
The company employs more than 100 people in Austin, but more than half of those jobs are expected to be moved to New York or California in the next year.
The company’s manufacturing-oriented engineering staff will relocate to its new factory site in Malta, N.Y., north of Albany, where the company expects to have a new factory in production in 2012.
That factory will employ about 1,400 people when it starts chip production. GlobalFoundries presently operates a factory automation laboratory in a converted warehouse near South Congress Avenue, but that too will be moved to New York.
Ranjit Nair, the company’s vice president for human resources, said many of the manufacturing workers are excited to be moving, because they will be working next to the company’s newest factory, once it gets built.
Several workers in human resources, legal, finance and information technology will see their jobs shifted to the new headquarters in California.
About two-thirds of the company’s more than 3,000 workers are part of its Fab 1 manufacturing operation in Dresden, Germany.
The remaining Austin operation will employ sales workers and support engineers who will work closely with AMD and other GlobalFoundries customers to smooth the process of making sure their chip designs fit well with the company’s manufacturing processes.
John Zucker, who has been hired as the company’s top account executive for AMD, is expected to become the compan&’s senior executive in Austin. Zucker previously worked for Jazz Semiconductor in California.
AMD is the company’s largest customer. Europe’s STMicroelectronics announced last month that it would use GlobalFoundries to make advanced chips starting next year. The manufacturing company expects to have more customer announcements in the months ahead.
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May 19, 2009
AMD's Meyer says layoffs are over
Dirk Meyer, the CEO of Advanced Micro Devices Inc., said the company is done with layoffs, and that its chip design operations should become profitable before the end of the year - assuming that personal computer sales improve in the second half.
Meyer made the forecast Monday at the Reuters Global Technology Summit in New York and his remarks were reported by the Reuters news service.
AMD has had two major rounds of layoffs in the past year, including a 10 percent company wide cut in April 2008 and another 1,100 cuts announced in January.
The company now has about 2,100 workers in Austin.
The profit forecast does not include results for GlobalFoundries, the manufacturing joint venture that AMD and the government of Abu Dhabi formed in February. The joint venture took over AMD’s manufacturing operations, and its financial results still are combined with those from AMD, which is its only customer.
AMD officials say they want GlobalFoundries to win enough other customers so that its results can be reported separately.
AMD executives originally had projected the company would become profitable in the first half of this year, but a PC industry downturn brought on by the global economic slump last fall forced the company into another round of cost-cutting. The company now says it can break even if its quarterly revenue reaches $1.3 billion.
AMD lost $416 million on sales of $1.2 billion in the first quarter. It was its tenth straight unprofitable quarter.
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December 8, 2008
AMD-Abu Dhabi investment deal changed
The Abu Dhabi investment company buying part of Advanced Micro Devices Inc. will pay less for the shares than originally planned.
The fund, called Mubadala, will now buy 58 million shares of AMD for considerably less than the $5.41 each that the original deal called for.
AMD shares have plunged since the deal was announced and were trading Monday morning at $2.14.
Under the new deal, Mubadala will pay the average price in the month before the transaction closes or Dec. 12, whichever is lower.
It will end up with a bigger stake in AMD than the 19.3 percent the original deal called for.
AMD also will end up with a smaller piece of the new company being created to own its manufacturing operations. The value of the assets it is contributing to that company had fallen. AMD will end up with 34.2 percent, down from 44.4 percent under the original deal.
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April 11, 2008
Phil Hester resigns as AMD's chief technology officer
Phil Hester, one of the star players in Austin’s computer industry for two decades, is resigning as chief technology officer of Advanced Micro Devices Inc.
Hester joined AMD in 2005 after running Newisys, a server startup. Before that, he worked for more than 20 years at IBM Corp.
AMD has had a rough time with delays in rolling out key new chips and this week said it would cut 10 percent of its workforce worldwide over the next six months.
The company is expected to report a first quarter loss next week.
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