Middle East firm to pay less for AMD stake

Chip maker also plans to reduce its stake in joint manufacturing effort with ATIC

Hammered by its falling stock price and slumping PC demand, Advanced Micro Devices Monday said it has agreed to cut the price of stock set to be purchased by Abu Dhabi's Mubadala Development Co. In addition, the company said it is taking a smaller stake than planned in the manufacturing operation it is creating with Advanced Technology Investment Co., also based in Abu Dhabi, United Arab Emirates.

Mubadala, which already owns 8.1 percent of struggling AMD, agreed in early October to pay US$314 million to increase its stake to 19.3 percent by purchasing 58 million newly-issued AMD shares, as well as warrants for 30 million additional shares. The announcement came at the same time AMD said it was spinning off its manufacturing operations into a separate company to cut costs and get an infusion of capital.

AMD said Monday that Mubadala will now pay a price equal to the lower of the average closing price of AMD's common stock from the 20 days ending Dec. 12, or the 20 days before the deal closes. The firm will also get an additional 5 million warrants.

AMD was trading at US$2.12 mid-day Monday, just about half of the US$4.23 closing price on October 6, the day before the deal was announced. The move is meant to help the money-losing AMD compete better against rival Intel by shifting the battle to chip design, rather than manufacturing, which is hugely capital-intensive.

AMD's stake in The Foundry Co., the temporary name for the manufacturing spinoff, will be cut to 34 percent from 44 percent. ATIC's share in the operation increases from 55.6 to 65.8 percent. AMD said ATIC, owned by the government of Abu Dhabi, will pay the same price agreed upon earlier for the smaller stake -- US$2.1 billion, of which US$1.4 billion will be invested in the joint business and US$700 million directly into AMD.

The move comes as research firms such as iSuppli are cutting their projections for PC market growth in 2009.

Join the PC World newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags AMD

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Eric Lai

Computerworld
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Matthew Stivala

HP OfficeJet 250 Mobile Printer

The HP OfficeJet 250 Mobile Printer is a great device that fits perfectly into my fast paced and mobile lifestyle. My first impression of the printer itself was how incredibly compact and sleek the device was.

Armand Abogado

HP OfficeJet 250 Mobile Printer

Wireless printing from my iPhone was also a handy feature, the whole experience was quick and seamless with no setup requirements - accessed through the default iOS printing menu options.

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?