AMD is in serious financial turmoil

With the acquisition of ATI, AMD has put a huge burden on its neck, which now seems to be beating back.

We can’t say that AMD hasn’t stood so badly in its battle against Intel yet, but in any case, he hasn’t been in such a bad financial position since human memory.

The reasons - because there are several - have been gathering since ATI’s acquisition last year. Many already asked at the time whether AMD had not taken on too much of a burden. It is also true that if they wanted to buy the Canadian video card maker, they would not have been able to do so at a better time, as their revenues increased, they made unprecedented profits, and their cash holdings reached a fairly high level.

The real problem was Intel’s backlash, in which the role of the whip was the aggressive pricing of Core 2 core-based processors and new CPUs. As a result, AMD was forced to post double the anticipated loss in the first quarter of this year. The loss of revenue due to the price war was also exacerbated by the fact that AMD's processor sales were 38 percent lower than expected.

AMD has thus found itself in a rather difficult situation, of which many experts say it can only evolve with outside capital. That's how they saw it at AMD, which is why it was announced earlier this week that $ 1,8 billion worth of bonds would be issued. The bonds will be redeemable for cash, but may even be exchanged for shares by investors if they deem it better.

The bond issue said many will not settle AMD’s position this year, so additional capital raising will be needed. The seriousness of the situation is shown by the fact that many believe that the future of the company lies in the success or failure of the upcoming Barcelona core processors. It’s also at Intel’s mercy, as the larger CPU maker is doing pretty well with the new chips awaiting launch, so the timing of their launch and the price of new processors is mostly a matter of tactics to further tighten or release the noose around AMD’s neck.