Thursday, February 19, 2009

AMD secures manufacturing spinout approval

It's official. AMD's shareholders have voted to spin out the chipmaker's manufacturing operations into "The Foundry Co," leaving AMD to focus on its designs.

As part of the "asset smart" carve out deal,AMD will issue 58 million shares and warrants to purchase 35 million shares to Mubadala Development Co. Mubadala-affiliated Advanced Technology Investment Company is expected to get around 66% of stake in The Foundry Co and Mubadala will own around 20% of AMD's outstanding shares after the transaction, which is expected to be completed by March 2.

When welast checked in on the AMD manufacturing spinout after the company in October 2008 announced initial plans and just as the downturn began to rear its ugly head, the lean of opinions had changed from a negative one -- one that said AMD could not compete without its manufacturing -- to a more positive one where readers commented that the spinout is a "lifesaving move" for AMD, that the company has "been spread thin" since buying ATI, and that this is "finally a positive move as it will buy them some time to work on new designs."

I continue to agree with the more positive lean, but I continue to be disappointed by AMD's lack of promotion that it can now, finally, refocus itself on designing. Today could prove monumental for AMD's recovery, yet the company issued only a short statement on the approval. And, yes, AMD has stated before (although, again, too briefly from my perspective) that the move will allow a refocus, but news like this merits repeating. And it especially merits repeating in this economic climate when with the spinout, AMD significantly lowers its debt and costs, without cutting jobs or R&D dollars further than it already has.

Do you agree? Should AMD make some noise about its Foundry Co approval? Given the changes to the overall environment since AMD first announced plans for the spinout in October, is this a step in the right direction? Make you own voice heard by posting a comment below.

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