Much of the strength in HP’s (HPQ) earnings yesterday came from PC sales, particularly laptops. After being up on its quarterly report, HP is fairly flat at mid-day, but chip provider Intel (INTC) is higher by 1.8% which should be expected when the world’s largest PC company does well.
But, the No.2 provider of chips for PC, AMD (AMD) is off 2.4% and trading within fifty cents of its 52-week low. Yesterday, the company launched its newest product, a quad-core chip. On Friday, AMD got $622 million from an investment arm of the Abu Dhabi government. The shares they bought were at $12.70. AMD is at $11.75 today.
The price drop seems out of place until investors look, once again, at AMD’s biggest short-term problem, its debt. AMD owes $5.1 billion in long-term debt and the company currently runs an operating deficit. Wall St, is concerned that the money AMD has raised is not enough.
Based on the company’s operating performance over the last year, it’s not.
Douglas A. McIntyre
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