Posted on Saturday, March 10 2007 @ 12:48 CET by Thomas De Maesschalck
Forbes
talks about AMD, stating the company is finding itself in financial peril, saddled with debt and bleeding from a brutal processor price war with Intel:
AMD finds itself the subject of rumors of a possible takeover or private-equity cash infusion. While it wasn't long ago that AMD was stealing a big slice of the microprocessor market and emerging as a long-term threat to Intel, those very gains may have left AMD's well running dry.
Though the price competition has cut into both chip makers' profits, Wall Street has punished AMD's stock particularly hard. Its shares have plunged more than 60 percent over the past year on fears about the company's ability to continue gaining share without hurting profit margins. Meanwhile, Intel's stock is down just 4 percent.
Investors are concerned AMD is spending too heavily to keep up with Intel's aggressive transition to next-generation manufacturing technology.
AMD's fall has wiped out about $10 billion in shareholder wealth. Analysts say the exodus will likely continue until the company rolls out its new chips this year and resolves fears about its dwindling cash reserves and high capital expenditures.
