14 DAY TRIAL // The financial woes through which AMD goes right now have apparently prompted the private equity firm Silver Lake to buy AMD shares at a "bargain price" and then wait until the company puts itself back on its feet.
AMD's risky financial position attracted lots of potential shareholders to buy stock at a very low price and see if it can get back on its feet after another quarter of losing money, something that amounts to about $187 million.
AMD ended the last quarter with $829 million in cash and cash equivalents and projects that, by the time this quarter is out, its cash and cash equivalents will be down to just $700 million.
Right now things aren't good for AMD, a company that's currently worth only about 1.434 billion, barely a fifth of the sum AMD spent to buy ATI in 2006. That leads analysts to believe that AMD is burning cash at a much faster rate than it should with major investments in cutting-edge technologies (see HBM) that most likely don't pay off against the more conservative approach of NVIDIA.
Silver Lake's excellent portfolio may be a signal of hope for AMD's future
However, it seems the opinions shared by analysts are quite optimistic about this move since Silver Lake will grand AMD a much-needed cash injection, while also having outstanding track records, being a global leader in technology investments in brands like the Chinese main online retailer Alibaba, Avago, GoDaddy, Motorola Solutions, Opera Solutions and many others.
Right now, AMD's stock is at $1.88 so we can expect the 20 percent sum didn't cost Silver Lake that much, and although the company doesn't have any guarantees it will see its money back, it's very likely the recent restructuring inside AMD was the main prerequisite for Silver Lake to infuse the much-needed cash in AMD stock.
To make sure it grows back, Silver Lake wants to see the right people put in the right places, hence Raja Koduri taking the lead in AMD's recently created Radeon Technology Group.
In other words, this string of events might be the last chance for AMD to become competitive, and since competition helps society, it’s the customers who will ultimately benefit from the resurgence of a stronger AMD.