Advanced Micro Devices Inc. (NASDAQ:AMD) recently announced its plans to commence a public offering of $600 million of common stock and $450 million convertible senior notes due 2026.
Additionally, AMD expects to grant a 30-day option to the underwriters to purchase up to $90 million additional shares at the public offering price and up to $67.5 million principal amount of additional convertible senior notes.
The company intends to use the net proceeds of $1,020 million from the offerings to repay its borrowings under its credit facility or to purchase its outstanding senior notes. The remaining amount can be used to call any or all of the untendered 7.75% senior notes due 2020. It can also be used for capital expenditures, working capital and other general corporate purposes.
In the recently reported second quarter of 2016, AMD had a cash and cash equivalent balance of $957 million, up $241 million from the prior quarter. The company generated $85.0 million in cash from continuing operations and recorded $21 million incapex.
AMD is the second-largest producer of microprocessors, GPUs and chipsets in the world. The company’s second-quarter loss was narrower than the Zacks Consensus Estimate loss. Management issued an upbeat third-quarter guidance due to expectations of strong demand for Semi-Custom and Graphics products.
The company is strengthening its position in key markets with the introduction of several APUs and GPUs. Its Radeon Technologies Group focuses on the graphics business and on improving its performance in traditional graphics markets. At the same time, the company is taking initiatives in immersive computing markets like virtual and augmented reality.
We believe AMD’s balance sheet will help it to capitalize on investment opportunities to enhance growth. We believe that the offering will lower its cost of capital, thus strengthening its balance sheet and supporting growth.
ADV MICRO DEV Price
Zacks Rank &Other Stocks to Consider
At present, Advanced Micro has a Zacks Rank #2 (Buy).
Some other stocks worth considering in the broader technology space are Alpha & Omega Semiconductor, Ltd. (NASDAQ:AOSL) , Amkor Technology, Inc. (NASDAQ:AMKR) and AXT Inc. (NASDAQ:AXTI) , each sporting a Zacks Rank #1 (Strong Buy).
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ADV MICRO DEV (AMD): Free Stock Analysis Report
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