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Reuters Market News
Moody's revises Advanced Micro Devices outlook
Monday October 7, 5:18 pm ET


(The following statement was released by the ratings agency)
NEW YORK, Oct 7 - Moody's Investors Service changed the ratings outlook of Advanced Micro Devices, Inc. (AMD) to negative following its announcement of significantly lower than expected revenues and a substantial loss for the third quarter. With cash flow from operations less capital expenditures in the first half of the year of negative $268 million; over $400 million of planned capital expenditures in the second half of the year, significant revenue and earnings weakness in the third quarter; and no signs of market strengthening over the near term, the negative outlook reflects concerns that liquidity will be further pressured.

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The ratings outlook affects the following: Senior implied rating -- B2 Senior secured shelf registration -- (P) B2 Senior unsecured shelf registration -- (P) B3 Subordinated shelf registration -- (P) Caa1 Preferred stock shelf registration -- (P) Caa2 At June 2002, AMD had $1.1 billion of cash and marketable securities. Debt maturities relating to its microprocessor facility in Dresden, Germany (Fab 30) approximate $100 million in the rest of calendar 2002 and $216 million in calendar 2003. The company had $75 million outstanding under a $200 million secured revolving credit facility that matures July 2003. AMD's $500 million senior convertible note (with a $23.38 conversion price relative to its current stock price of around $4) does not have its first put date until 2009. The prior stable outlook had anticipated weak demand in the personal computer sector as well as intense microprocessor price competition from Intel, which would contribute to near term losses for AMD. These trends, however, have been more severe than expected. To the extent that liquidity weakens and sufficient sequential improvement does not occur in the seasonally stronger fourth quarter, the credit ratings would likely be reviewed for possible downgrade. Advanced Micro Devices, Inc., headquartered in Sunnyvale, California, designs and manufactures microprocessors, flash memory, and other semiconductors products.