greg, AMD has said they are done with external financing for a while so the Moody's action should have no real consequences (which may not be the same as no impact on the share price). Last year when they were actively restructuring their finances this would (and did) have an impact. They were forced to sell convertibles at a historically low conversion price (although they also got a very low interest rate) and borrowed against Fab 25 at less desirable terms. The net result of those transactions was that AMD's financial position has not deteriorated badly but there has been substantial dilution. If you were long AMD it was possible to offset the dilution by picking up some very cheap shares. They have indicated that they expect to be approximately cash flow neutral for 2003. Indeed the Moody's note indicates that depreciation should exceed capital investment by some 150 million for the year. Based on AMD guidance, losses should not greatly exceed that even if revenue is disappointing (actually AMD seems to me to be indicating they expect to be close to breakeven if not better for the last 3 qtrs together which would almost certainly have them cash flow positive). If they have another hundred million dollar loss in Q2 and do not project profits for the second half, then the Moody downgrade will be the least of their problems. If they are cash neutral for the remainder of the year they will see upgrades and won't have any need of additional financing anyway. Check the actual amounts of short term debt coming due in 2003, they are talking $30-40 million, which is background noise to a company with the Revenues and leverage of AMD.
Actually I suspect this is part and parcel with the other FUD we have had the last couple weeks. The Street.com has two notes in as many days using AMD as an example of how the market is overvalued. Aberdeen releases another report explaining how AMD causes SARS and will lead IT managers to eternal damnation and with all due respect you and all your Intel buddies come over here and go on and on about how QS is a horrible fraud perpetrated on an unsuspecting public.
All when AMD has the best product lineup in its history, is promising to have breakthroughs into at least two important markets and the stock was threatening to break out as well. I honestly believe that this is a combination of Intel trying to dirty up AMDs reputation before OEMS and corporate IT guys commit to Opteron (can't trust 'em, may not survive to provide support..) and big funds trying to talk down the stock so they can load up. Obviously those are conflicting desires (the funds won't load up if Opteron is a dud) but they share an interest for the moment. The funds will be happy if they can keep the shares cheap until they really know whether Opteron will take off, they can accumulate and if things take off they are set, if they don't there isn't much at risk. Like with Athlon Intel seems to be really leaning on vendors to the point that they are hiding their support for Opteron. I don't doubt Intels ability to succeed at this game, but it also creates the potential for replaying early 2000. We may not know whether Opteron is a hit til Dell announces adoption and all hell breaks loose. AMD just needs a couple good quarters to put to rest (for now) the solvency concerns. That would double the share price. I don't agree with those folks who don't think the stock is going anywhere. I think it will see mid teens as soon as they post a meaningful (more than .30)profit and will be sub $5 if they continue to burn cash in Q2. It is possible they will come out right in the middle but all that leverage makes it somewhat unlikely. I suspect by October will will know for sure shich way it will break.
E
AI
Market Data 
Markets 
