Daily Archives: June 4, 2008

Nuance Raising Cash (NUAN)

Nuance Communications, Inc. (NASDAQ: NUAN) just announced that it has agreed to sell 5,575,000 shares of its common stock in an public secondary offering of its stock.  Thomas Weisel Partners is the sole underwriter in this offering and has been granted a 30-day option to purchase up to 836,250 additional shares.

The company said that it intends to use the net proceeds from this offering for general corporate purposes such as working capital and to fund possible investments in and acquisitions of businesses, partnerships, minority investments, products or technologies. The gross proceeds before any discounting, dilution, and selling fees would come to roughly $104.8 million.  Prior to any dilution, it has a $3.98 Billion market cap.  At the end of last quarter it listed about $354 million in cash and liquidity, but it also has some $897 million in direct long-term debt.

What is interesting is that we just named this as one of the "8 Companies Microsoft Should Buy" after its failed Yahoo! deal to our SPECIAL SITUATIONS newsletter and we named part of the reason being its extensive portfolio of speech to text software. 

You can join our open email distribution list to hear about other secondary offerings, mergers, special financings, IPO’s, restructurings, and other special situations.

Shares closed today at $18.80, and shares fell about 4% after-hours on the news. 

Jon C. Ogg
June 4, 2008

Posted on: June 4, 2008 – 4:13 pm in Secondary Offering, Software, ,

What’s Up At Stamps.com? (STMP)

It’s always interesting to peruse the 52-week highs and lows for trading ideas.  Sometimes you see some head-scratchers and sometimes you get Eureka.  A review of the highs today showed a more than interesting move in Stamps.com (NASDAQ: STMP).  The company does exactly what you would guess, internet-based postage solutions.  It is part of the USPS-approved PC Postage Service.

Today the stock is up 5% at $15.10 with about 20 minutes to the close, and its 52-week trading range is (was) $8.47 to $15.00.  Interestingly enough, it has only traded about 122,000 shares and its average daily volume is about 150,000 shares.  This now has a $292 million market cap.  It’s liquidity as of last quarter was more than $90 million in cash, equivalents, and long-term investments, while it has essentially no long-term debt.

This is one is extremely thin on coverage with First Call noting 3 estimates and a consensus of $0.63 EPS on $87 million in revenues for 2008.  So there is nothing in the remedial analysis that screams total bargain basement nor anything that screams grossly over-valued here.  There have been no major analyst calls.  Back in April this was trading under $11.00.

Could this be genuinely as simple as people not using gas to go to the post office?  Of course not.  There may still be some excitement about last month’s approval to protect its "tax net operating losses."  It also has a provision that any holder acquiring more than 5% of the shares outstanding has to first obtain a waiver from the company’s board of directors and those holders who already hold more than 5% cannot make any additional purchases of Stamps.com stock without a waiver.

Here was the description of that move:
Stamps.com currently has approximately $250M in Federal NOLs and $150M in State NOLs, with a potential value of up to $95M in tax savings over the next 15 years. The value of these NOLs could be significantly impaired unless the Company avoids potential transfers of its stock that could trigger such an “ownership change” under Section 382.

We had looked at this one for our Special Situations newsletter before, but we had to pass on it because the stock options to hedge the stock were too illiquid on the surface.

You can join our open email distribution list to hear about other secondary offerings, mergers, special financings, IPO’s, restructurings, and other special situations.

Jon C. Ogg
June 4, 2008

Posted on: June 4, 2008 – 2:46 pm in HI/LOW, Internet,

The 52-Week Low Club (ABK)(MBI)(BAC)(JAVA)(IDEV)

Indevus Pharmaceuticals (IDEV) Bad news on drug trial. Falls to $1.21 from 52-week high of $8.22.

Ambac (ABK) Possible downgrade by Moody’s. Drops to $2.45 from 52-week high of $89.33.

MBIA (MBI) Same downgrade issue. Sells off to $5.42 from 52-week high of $68.98.

Sun Microsystems (JAVA) No one believes turnaround story. Moves down to $12.09 from 52-week high of $25.04.

Bank of America (BAC) Concerns about earnings and buy-out of Countrywide (CFC). Slips to $31.81 from 52-week high of $52.96.

Douglas A. McIntyre

Posted on: June 4, 2008 – 2:40 pm in Mergers and Buy Outs, , , , ,

RIM (RIMM) Beats Apple (AAPL) In Smartphone Survey

According to the latest data from Changewave, Research-In-Motion (RIMM) is running away with the US smartphone market. The research firm’s May survey was based on data from 2,049 respondents involved with IT spending.

The latest data shows that the RIM Blackberry has 76% of the corporate smartphone market. That is up three points from the February survey, Palm (PALM) had a 17% share, down one point.

As for purchase plans in the third quarter, 82% of buyers believe they will get Blackberries. Thirteen percent plan to buy Apple (AAPL) iPhones, and only 8% plan to buy a Palm product.

The iPhone may sell well, but not into the corporate market.

Douglas A. McIntyre

Posted on: June 4, 2008 – 2:08 pm in Wireless, , ,

Exchanges And Financial Websites Battle Over Real-Time Quotes

Yahoo! (YHOO) Finance began to offer real-time stock quotes recently. It got around the huge fees changed by NYSE and Nasdaq by pulling the data from the Bats ECN, an electronics exchange that handles about about 10% of the volume for stocks traded in the US each day. The two exchanges get a large amount of their revenue for charging for real-time quotes, so the Yahoo! deal is a threat to their business.

A few days after the Yahoo! launch, Google (GOOG) Finance began to offer real-time quotes from Nasdaq. The search site did not make any mention of if or when it would offer a similar service from NYSE. Several Dow Jones sites carry the new service, but none of the participants have said why only Nasdaq is offering its real-time quotes at no charge.

It is widely assumed within the industry at that AOL Money site will also begin to put the Bats or the Nasdaq service on its site. It is hard to imagine that it would want a service that does not include NYSE real-time data. If AOL goes the Bats route with Yahoo! about 50% of visitors to finance sites will be using the system.

What is not clear is whether the Bats service will eventually end up being used on all of the major financial sites because it is free or whether the portals will elect to license the data from the major exchanges. Based on conversations with management at the internet companies, running the exchange data could cost $3 million a year.  If use of quotes directly from the exchanges becomes widespread, it is not a competitive advantage for any of the financial sites. The NYSE and Nasdaq will be receiving tens of millions of dollars for something that is likely to become useless for pulling in extra traffic for any single site. Once everyone has it, the power of being early to market is gone.

The Bats program may pressure the exchanges to exit selling real-time quotes to individual investors. Bats data is not identical to exchange data because it only shows prices for a percentage of all trades. But, especially for widely-traded stocks, the quotes are likely to be identical to those streamed from the NYSE and Nasdaq. For stocks with less volume there may be some price dislocation. What casual investor want to pay a monthly fee for something which is available for free?

Institutional traders will continue to need exchange data for its completeness. Heavy retail traders usually get real-time exchange data from their discount brokers. For most people who simply want current price data that is not delay for 20 minutes, Bats is more than adequate.That means that the exchanges are about to lose a piece of their revenue, unless they want to substantially lower their prices.

Douglas A. McIntyre

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Posted on: June 4, 2008 – 1:50 pm in Internet, , , ,

Verizon, Alltel, TPG and Goldman Sachs (VZ, GS, T, VOD)

Alltel may soon be acquired by Verizon Communications Inc. (NYSE: VZ), according to a breaking news report from CNBC’s David Faber.  Faber just noted that the companies are in advanced talks to acquire the current private equity held Alltel by TPG and GSCP, which are Texas Pacific Group and Goldman Sachs Capital Partners…. part of Goldman Sachs (NYSE: GS).

Alltel went private last year and has somewhere in the vicinity of 13 million wireless subscribers.  The value of that deal was in the $27 to $27.5 billion range, and interestingly enough this new deal may not be at any or at much of a premium to that price.

If there is any company that can acquire this and not have all the credit rating issues and not run into multiple bank debt issues like private equity, then it is Verizon.  There are a couple of other players like AT&T (NYSE: T) or some foreign-owned carriers that could swing it too.

Verizon currently has a market cap after a 1% drop to $36.91 of around $105 Billion.  The one question that would truly come from this is if it would have any impact on the Vodafone (NYSE: VOD) stake in Verizon Wireless that has been a perennial rumor that something will happen there.

You can join our open email distribution list to hear about secondary offerings, mergers, special financings, IPO’s, restructurings, and other special situations.

Jon C. Ogg
June 4, 2008

Posted on: June 4, 2008 – 1:35 pm in Mergers and Buy Outs, Telecom, , , ,

Jos. A. Bank Earnings Send Shorts Scrambling (JOSB)

JoS. A. Bank Clothiers, Inc. (NASDAQ: JOSB) has just announced its quarterly earnings report  for its Q1-2008.  Earnings rose by 18% to $0.53 EPS, compared to $0.45 EPS for Q1-2007 and compares to First Call estimates of $0.46 EPS.  Net income for Q1-2008 was $9.8 million, up from $8.4 million in Q1-2007.  Its total net sales increased 12.3% to $145.4 million from $129.5 million; comparable store sales increased 6.4% and direct marketing sales increased 0.2%.  First Call had revenues at $142.3 million.

As many of you know, this is one of the more heavily shorted retail apparel stocks out there.  As of May 15, it had 13.558 million shares listed in the short interest.  Shares are now up 8% at $29.50 after the news.  That was 14.57 days to cover, but was lower than some other recent readings. 

That is still plenty of shares to send short sellers scrambling. As far as garnering any guidance, it has a conference call late tomorrow morning.

Jon C. Ogg
June 4, 2008

Posted on: June 4, 2008 – 12:46 pm in Apparel, Earnings, Retail,

Moody’s Review of Insurers Saps Market Gains (MBI, ABK, MCO, MHP, BRK/A)

MBIA Inc. (NYSE: MBI) and AMBAC Financial Group Inc. (NYSE: ABK) are actually responsible for taking back some of today’s market gains.  Actually, it is Moody’s Corp. (NYSE: MCO) that is responsible for this.  Moody’s has placed the ratings of both bond insurers on review for a possible downgrade.

The truth is that even after those "Aaa" ratings to the "Aa" levels on growing concerns that their losses from mortgage-backed debt will be higher than expected and based upon the significantly constrained prospects for each of these to get new business.

Based upon how late to the party, how wrong the ratings were, and even how conflicted their models are… Every brokerage firm on Wall Street should just adopt the policy of dropping coverage on the independent ratings agencies like Moody’s (NYSE: MCO) and McGraw Hill (NYSE: MHP) for its S&P unit.  Shutting them out of the ratings agency game as far as Wall Street covering them would let the independent ratings agencies see how irrelevant they have become.  That won’t ever happen, but it would be an interesting battle to see.

This action from Moody’s today is a score for Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK.A) as the new bond insurer gets to cherry pick and charge higher rates to insure.

Jon C. Ogg
June 4, 2008

Posted on: June 4, 2008 – 12:11 pm in Analyst Calls, , , , ,

Lear Follows Autos, Lowers Targets (LEA)

Lear Corporation (NYSE: LEA) has just lowered its guidance this morning based upon announced revisions of industry forecasting services and others which have announced downward revisions in their estimates for 2008 North American vehicle production based on lower sales rates for full-size pickup trucks and large sport utility vehicles.  In addition to lower unit sales, raw material costs, particularly costs related to steel, have continued to increase.

Lear cut its 2008 forecast for North American industry production from 14.1 million vehicles to approximately 13.8 million vehicles.  Its sales outlook for 2008 is being adjusted downward to approximately $15.3 billion, from the previous outlook of $15.5 billion.  It also sees lower income before interest, other expense, income taxes, restructuring costs and other special items to a lower range of $600 to $640 million from the previously offered range of $660 to $700 million.  The company is also increasing its estimated restructuring investment for 2008 to about $125 million.  The revised outlook for full-year 2008 free cash flow is now approximately $200 million.

Lear shares are actually still up about 2.5% at $25.38 today, and its 52-week trading range $20.00 to $41.33.

Jon C. Ogg
June 4, 2008

Posted on: June 4, 2008 – 10:36 am in Autos, Earnings Warning,

Explanation of Level 3 Communications Volume & Price Surge (LVLT)

It has been hard to not notice the movement and trading activity in Level 3 Communications Inc. (NASDAQ: LVLT).  This set up an alert for us over at VOLUME SPIKE earlier this morning and we wanted to do some digging since this is one of the more stocks and frequently covered on our "10 Stocks Under $10" newsletter.

This was looking like a head-scratcher if you only looked at the headlines available on the surface and overlay them with the trading volume and movement from yesterday and this morning.   Yesterday we noticed a 2-times volume day with an 8% rise to $3.74.  Then this morning we have seen a sharp move with another 8% gain to $4.04 after 90-minutes of trading.  Shares have come back off a bit and are at $4.00 on lst look.  While the volume is already almost 17 million shares (24.6 million average daily volume) it isn’t off the charts for this stock.  So we wanted to dig further…..

There are two things that account for this.  First and foremost, a JPMorgan analyst has been reported as making positive comments with a $5.00 valuation.  We have not gotten that full note nor any of the details, so we are just treating that as hearsay until that is better described at the source.  There was a note yesterday that UBS had reiterated its "Neutral" rating.

More importantly, the company made a presentation yesterday at at the Oppenheimer Annual Communications & Technology Conference.  Some of the highlights are as follows:

  • Expects to be free cash flow break even in aggregate for rest of 2008;
  • Expects to be free cash flow positive for full year 2009;
  • Core 2008 revenue growth expected 8% to 13%;
  • Debt maturity schedule no issue until 2010 or beyond;
  • Debt/EBITDA expected to be 6.6X for 2008, down significantly from last three years.

At the end of April this was under $3.00 and it was under $2.00 at the end of March.  This is also the first time the stock has seen north of $4.00 since October 2007.  With this being a 6-month high, expecting some profit taking might be prudent until we are closer to more new data from the company or until we get any game changing calls from analysts.

Jon C. Ogg
June 4, 2008

Posted on: June 4, 2008 – 10:25 am in HI/LOW, Internet, Telecom,

Chimera Going For More Capital (CIM, NLY)

Chimera Investment Corporation (NYSE: CIM) has filed with the SEC to raise up to $345,000,000 in new capital via the sale of common stock.  Concurrent with this offering, the company will sell shares of common stock to Annaly Capital Management, Inc. (NYSE: NLY) in a private offering at the same price per share as the price per share of this public offering.  It does note the limitations of a 9.8% stake maximum percentage ownership under the REIT qualifications.  This was the entity that we referred to as "Annaly’s vulture entity" when it was coming public.

Chimera is listing Credit Suisse and Merrill Lynch as the lead underwriters.  Others in the syndicate are listed as Deutsche Bank, JPMorgan, Citi, and UBS.

It plans to use the net proceeds of this offering to finance the acquisition of additional prime and Alt-A mortgage loans, non-Agency RMBS, Agency RMBS and ABS, CDOs, CMBS and other consumer or non-consumer ABS. It may also use the proceeds for other general corporate purposes such as repayment of outstanding indebtedness, working capital, and for liquidity needs.

As Chimera has only been public for about 6 or 7 months and as the stock has been hit hard over its assets it previously purchased, the reaction is not a solid one today.  Shares are down 5.6% at $12.20 after 30 minutes of trading, and its post-IPO trading range is $10.59 to $19.79.

You can join our open email distribution list to hear about other secondary offerings, mergers, special financings, IPO’s, restructurings, and other special situations.

Jon C. Ogg
June 4, 2008

Posted on: June 4, 2008 – 9:06 am in Financial Stocks, REIT, Secondary Offering, ,

SPAC One Step Closer to First Acquisition (GGA, GS)

GCA Acquisition (AMEX:GGA) has received anti-trust clearance related to its proposed $1.3 billion purchase of merchant power generator Complete Energy. Complete Energy owns two natural-gas-fired combined-cycle power plants:

  • the 1,022-megawatt La Paloma plant near Bakersfield, California,
  • and the 837-megawatt Batesville, Mississippi plant.

All of Batesville’s capacity is committed under long-term contracts with J Aron & Company, a subsidiary of Goldman Sachs (NYSE:GS) and a Mississippi utility company. The Bakersfield plant has two tolling agreements for about half its capacity, with the remaining capacity sold on the California merchant power market.

Following completion of the merger, investment funds managed by The TCW Group will own about 19% of Complete Energy; existing GCA shareholders will own about 42%; and the current owners of Complete Energy will own 10%. This is a very good deal for every stakeholder, promising dependable, if not massive, returns, increased access to financing for Complete Energy, and experienced management to run the show.

It appears that shareholder approval is still an outstanding issue, although with this being energy it seems that the approval would be more likely than some other SPAC conversions.

Paul Ausick
June 4, 2008

Posted on: June 4, 2008 – 8:29 am in Mergers and Buy Outs, Oil & Gas, Utilities, ,

With No US Investors, Sovereigns Get Ready To Pour More Cash Into Financials (C)(MER)

If US financial companies go shopping for more cash as the credit crisis drags on, Kuwait wants the world to know it has a big bank account. A good deal might just pull some of that capital in.

Althougth Kuwait has not mentioned investing in Lehman (LEH), the investment bank better hope for some interest. Its stock is taking a pounding over the fact that it needs money and may not be able to raise it. For $17 billion, Kuwait can buy the whole company.

But, Kuwait seems to want somewhat safer bets, although nothing looks safe right now. According to Reuters, "State-owned Kuwait Investment Authority (KIA) is looking at more investments in the financial sector and might consider raising its stakes in U.S. banks Citigroup (C) and Merrill Lynch (MER)."

Wall St. must wonder why no US cash is coming forward to rescue the likes of Lehman or shore up Citi and Merrill.

Perhaps they know better

Douglas A. McIntyre

Posted on: June 4, 2008 – 7:25 am in Banking, , ,

Smucker & Folgers: Sweet Caffeine (SJM, PG)

The J. M. Smucker Company (NYSE: SJM) and The Procter & Gamble Company (NYSE: PG) Folgers unit have confirmed yesterday’s reports that the two companies are going to merge.  The Folgers coffee business was going to be spun-out of P&G already, and this will more quickly exact that transaction. 

Folgers will merge into The J. M. Smucker Company in an all-stock "reverse Morris Trust" transaction valued at approximately $3.3 billion.  This number includes an estimated $350 million of Folgers debt.

As part of this transaction, Smucker is going to issue a one-time special dividend of $5.00 per share to current Smucker shareholders as of the record date ahead of this merger. Following the one-time dividend, P&G shareholders will receive approximately 53.5% of Smucker in a tax-free stock-for-stock merger.

The company believes that the deal will be accretive in 2009, assuming a 2008 deal closing date with Folgers contributing $80 million in net income and $820 million in EBITDA.  The company sees a combined 2009 estimated sales number of $4 Billion, with earnings per share before one-time items at $3.45 to $3.50 EPS.  For 2010, it sees $3.62 EPS.

You can join our open email distribution list to hear about other mergers, special financings, IPO’s, secondary offerings, restructurings, and other special situations.

Jon C. Ogg
June 4, 2008

Posted on: June 4, 2008 – 7:21 am in Food, Mergers and Buy Outs, ,

Downgrading The Towers Sector (AMT, CCI, SBAC)

RBC Capital Markets has issued a downgrade of the cellular and mobile tower sector this morning, which looks like it will weigh somewhat on the shares in the group.  Its prior weighting was "Outperform" in the group, and these three stocks were lowered to a "Sector Perform" rating:

  • American Tower (NYSE: AMT); stock indicated down over 1%.
  • Crown Castle (NYSE: CCI); stock indicated down 1%.
  • SBA Communications (NASDAQ: SBAC); stock indicated down almost 1%.

Most of these stocks were very close to 52-week highs, so this is  a group to watch in pre-market trading as we get closer to the open.

Jon C. Ogg
June 4, 2008

Posted on: June 4, 2008 – 7:04 am in Analyst Calls, WiMAX, Wireless, , ,

Top 10 Pre-Market Analyst Calls (BMY, MAR, MS, NRG, OMRI, SNCR, TRMB, TSN, MTN, XNPT)

These are ten of the analyst calls we are focusing on this Wednesday morning in pre-market trading:

  • Bristol-Myers (NYSE: BMY) cut to Neutral at Cowen.
  • Marriott (NYSE: MAR) cut to Perform at Oppenheimer.
  • Morgan Stanley (NYSE: MS) Raised to Outperform from Market Perform at Wachovia.
  • NRG Energy (NYSE: NRG) Cut to Neutral at Credit Suisse.
  • Omrix (NASDAQ: OMRI) Cut to Neutral from Buy at UBS.
  • Synchronoss Tech (NASDAQ: SNCR) started as Buy at Brean Murray.
  • Trimble Navigation (NASDAQ: TRMB) Cut to Neutral from Overweight at JP Morgan.
  • Tyson Foods (NYSE: TSN) Raised to Outperform from Market Perform at Wachovia.
  • Vail Resorts (NYSE: MTN) started as Buy at Banc of America.
  • XenoPort (NASDAQ: XNPT) Started as Buy at Goldman Sachs

Jon C. Ogg
June 4, 2008

Posted on: June 4, 2008 – 6:53 am in Analyst Calls, , , , , , , , , ,

Sony’s (SNE) New Plan To Drive Away Customers

Sony’s (SNE) PS3 has not sold as well as the Microsoft (MSFT) Xbox 360 or Nintendo Wii. But, the Japanese company has dropped prices and more games are coming out to add to the library of products which will work on the platform.

Sony has come along with the brilliant idea of serving advertising over the internet to customers who have bought a PS3. In other words, people get to pay $500 for the console and $70 for a video game so that they can watch ads to make Sony rich.

According to The Wall Street Journal, a new partnership the consumer electronics giant has set up "will bring in-game advertising to Sony’s PlayStation 3 console for the first time."

Now, all Microsoft will have to do to market the Xbox 360 is say "advertising-free games here".

Douglas A. McIntyre

Posted on: June 4, 2008 – 5:13 am in Video Games, ,

Motorola (MOT): A New Chief For A Busted Company

Motorola (MOT) may be close to finding a new CEO for its handset division. It is his job to do what two generations of management before him could not. He is being asked to reverse the slide in sales of the cellphones that Motorola makes. His job will be harder than those of his predecessors. The company’s market share of global handset is down to 10% from 22% two years ago. Competition is worse as Nokia (NOK), Apple (AAPL) and others kick MOT while it is down.

It does not do anything to disparage garbage haulers to say that one of them could run the Motorola handset business as well as a consumer electronics executive. The unit is in such a bind, that it probably cannot get out. According to The Wall Street Journal, MOT "Chief Executive Greg Brown is desperate to find a manager to turn around Motorola’s mobile-devices division, which has lost $1.6 billion since January. 2007."

While Motorola has flailed, its rivals have introduced successful products at both ends of the handset market. Samsug and Apple has been especially strong in the high-end smarphone business and Nokia has put out more and more inexpensive products for the emerging markets.

Motorola has a market cap of $20 billion. Based on their operating incomes, the company’s enterprise and home products divisions could be worth at least that. What is the remaining handset operation worth? Next to nothing. And, it will require at least $2 billion as a standalone company because its losses will go on for at least several quarters.

The odds of fixing the firm are similar to those of drawing to an inside straight.

Douglas A. McIntyre

Posted on: June 4, 2008 – 5:04 am in Wireless, , ,

A Risk As China And India Move From Underwriting Oil (PTR)(SNP)

India and China are starting to get the message that they cannot buy oil cheap and sell by-products like gas and diesel low. When the deficits start to hit hundreds of billion of dollars, the action is a little harder to swallow

China has already started to back off of the practice of supplying more and more capital to support state-controlled oil operations like PetroChina (PTR) and China Petroleum (SNP). Now, India is matching that. According to MarketWatch, "The latest moves are expected to ease the losses at state-controlled oil-refining and marketing firms like Indian Oil Corp."

The fact that consumers and businesses in the two huge countries will have to pay significantly more for the gas that runs their cars, the diesel that runs their truck, and the oil that heats their homes could do some real damage to consumer spending and GDP growth in those countries. It is not totally unlike the choices that are being made in the US.

The net impact on the economies in India and China is that they may have to raise export prices to offset a decline in consumer spending. There are very few other alternatives to keep GDP improvements in hand.

Those more expensive exports will be marketed into the US and other parts of the West where there are buyer’s strikes due to poor credit markets and rising commodities prices.

Keeping fuel prices low may have pushed economic growth higher in China and India, but it is time to pay the pay the piper. His compensation has been deferred for too long.

Douglas A. McIntyre

Posted on: June 4, 2008 – 4:48 am in Oil & Gas, ,

AMD (AMD): Still Too Far Behind

AMD (AMD) is about to launch it new chip for laptops. It will be helpful to consumers who want extra-special graphics and should help save battery power. AMD’s share of the laptop market is now around 14%. That has been falling.

AMD’s chipset is unlikely to change that. Investors don’t think much of the company’s prospects. Its stock is off about 75% over the last two years, and its still sports $5 billion in debt, mostly from is disastrous takeover of ATI.

The new product melds together several features that AMD hopes will make it a tool for resurrecting the company. According to The Wall Street Journal "The combination of chips is particularly good for entertainment applications that are driving many laptop purchases."

Since AMD has so little of the market, it is not a lock that new chips can get it back market share. It may have to resort to aggressive pricing, a move that a company with low gross margins can hardly afford.

In a world where balance sheet strength is an important as products, AMD is a quart low.

Douglas A. McIntyre

Posted on: June 4, 2008 – 4:29 am in Semiconductor, ,