AMD's stock rises on news of planned office sale
SAN FRANCISCO (AP) — Advanced Micro Devices Inc.'s battered stock rallied Thursday on news that the troubled chip maker is looking to sell a Texas office complex to raise cash for a comeback attempt.
THE SPARK: The plans to sell AMD's 60-acre campus in Austin, Texas, could raise $150 million to $200 million, according to company spokesman Drew Prairie. Any deal would be contingent on the buyer agreeing to a multi-year contract to lease back the campus to AMD, which is based in Sunnyvale, Calif.
"This is a good business decision that supports our long term corporate strategy by generating capital we can apply to operations as opposed to having it locked in real estate," Prairie said in a statement.
AMD is the world's second largest maker of microprocessors, but it has been losing ground to its larger rival, Intel Corp., at the same time that overall demand has been falling because of a weak economy in many parts of the world and declining sales of personal computers.
The adversity saddled AMD with a loss of $710 million during the first nine months of the year, leaving the company with $1.3 billion in cash at the end of September. That's $465 million less than AMD had at the beginning of the year.
THE BIG PICTURE: AMD's deepening problems have spooked investors, causing the company's stock price to plunge by about 75 percent from its 52-week high of $8.35 reached eight months ago.
The downfall has increased the pressure on AMD's management to cut the company's losses. Last month, AMD began trimming its work force by 15 percent, or about 1,800 jobs, in an effort to reduce its annual expenses by about $190 million.
Earlier this month, AMD denied a published report that it had hired investment bankers to explore a sale of the entire company. AMD currently has market value of just $1.5 billion.
SHARE ACTION: The stock had added 6 cents, or 3.1 percent, to $2.02 in afternoon trading. The shares fell to a three-year low of $1.81 earlier this month.