greg, did you read my post? IF AMD needed to borrow in the next few months a drop in its debt rating would have a real impact. But they have declared that they are done borrowing for a while, so that should be a nonissue. It would probably cut the current value of outstanding debentures, but that is not particularly relevant to AMD itself. If AMDs financial performance is such that it has to tap commercial lending further, they would face substantial problems with or without the downgrade, indeed they would probably see the downgrade as soon as anyone got a whiff of the need for additional cash. So the decision itself has no direct impact on AMD. I suspect that Moody's will have the account in review until it becomes clear whether Q2 will see further cash outflow or they are essentially at cash breakeven. That is essentially what they say in the release. So as someone else noted this is a reminder that AMD would be in financial difficulty if they continue to hemorhage cash. I don't really see that as news, do you?
As for the number of legs under this stool. AMD has one FORTIETH of Intel's market value while having about one FOURTH of their market share in nearly all their profitable product categories. Standard measures such as price to book and price to sales have AMD about one fifth the price of Intel and most other semi stocks. Presumably it sells at twenty cents on the dollar because someone has noticed that it is a bit risky. Nonetheless every so often we are treated to the Intel folks dicovering this anew and rushing onto the board to tell us again how stupid AMD investors are for betting on this lousy company and how the latest failure to keep pace with a $140 billion dollar company proves its position is hopeless.
Just for the record I (and I suspect every other AMD investor) knows that they are one serious problem away from bankruptcy. What you forget is they are also one success from big profits. That is the nature of their business, made more so by financial leverage. One analyst projects Opteron as a billion dollar per year product. Add a little improvement in the global economy lifting flash sales and AMD could pay off its debt in one year, just as it did in 2000. Since most of the debt is in convertibles, they would actually accomplish the feat while keeping most of the cash. I think all the noise at the moment is more likely evidence that they will succeed than that they will fail, otherwise Intel wouldn't bother paying folks to say nasty things about them (refering to the Aberdeen group, not the posters on this board who I am sure are independent and objective in everything they write).
E
E
AI
Market Data 
Markets 
