Advanced Micro Devices Inc (AMD)

[chipdesigner]

I think you misunderstand some of the details.

What they did a few weeks back was to increase the total number of shares of Spansion by ~15%, while keeping the range of $16-$18, that is, they raised its projected market cap by 15%.

Spansion "admitted" that testing capacity is constrained, while reiterating they would see improved revenues and GMs. They won't break-even (they say), but the loss will continue to decline.

If you actually want a #, it isn't $14.70, but $14-$15.75, midpoint of $14.875.

The equivalent range to $16-$18 @ the old share count is $14-$15.75 at the new share count.

That is, a range of $14-$15.75 results in the market cap range expressed before the share increase a few weeks back.

Do note that there is still an option for underwriters to sell an addition 5M shares. (~44M instead of ~39M)

In that event, AMD will hold ~38% post-IPO, vs. 40% if they do not exercise this right.

The upshot is that an IPO price of $14-$15.75 would mean they got the market cap they expected up until the Nov increase, there would just be %15 more shares at a 15% lower price per share.

They would have to go below $14, and have the underwriters not sell the extra 5M, in order to miss their initial cash-raising goal.

Spansion is already priced to sell. I expect it will price on Wednesday, as planned, probably at $16-$17.