AMD Shares Climb on Plans to Sell Austin Campus for Cash
Stock Chart for Advanced Micro Devices Inc (AMD)
Nov. 29 (Bloomberg) -- Advanced Micro Devices Inc., the second-largest maker of personal-computer processors, rose as much as 8.2 percent on optimism that the sale of its campus in Austin, Texas, may help shore up its cash reserves.
The company seeks to raise $150 million to $200 million in a transaction that may close in the first quarter, said Drew Prairie, a spokesman. Once the chipmaker sells the site, which houses corporate offices, it will lease the space back over multiple years.
While a cash infusion will help AMD as it burns through reserves, the company needs more resources if it wants to become competitive again, said Patrick Wang, an analyst at Evercore Partners Inc. (EVR) Wang estimates AMD will run through about $100 million in cash this quarter.
“The sale-lease back is more of a short-term Band-Aid,” said the New York-based analyst. “It doesn’t change the fact that there’s a chance AMD doesn’t exist anymore in 2 years.”
Last month, AMD gave a forecast for fourth-quarter sales that fell short of analysts’ estimates and said it will cut 15 percent of its staff, citing weak demand across all product lines in a challenging economic environment.
The revenue projection put the Sunnyvale, California-based company on course for its fourth consecutive quarterly sales decline. That led analysts such as Sanford C. Bernstein & Co.’s Stacy Rasgon to predict that, if the trend continues, cash reserves may fall short of what AMD says it requires.
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