weskurtz81 :
Sailer,
What exact calculations do you do to figure out if AMD is basically bankrupt?
The reason I ask is because I thought that you have to take into account all assets, and then compare it to debt. I am not very keen on accounting, so feel free to enlighten me.
I'll try to explain my thoughts. I'm separating the AMD and ATI divisions when I use the term bankrupt. AMD paid over $5 for ATI, as I remember. I don't have the exact figure handy at the moment. At today's stock price, AMD is worth about $4.60 billion, plus it has the debt for ATI to be serviced, still nearly $5 billion. So the company is worth less then the debt that it owes. Again, last I read, AMD has about $2 billion of cash on hand, so it is solvent by a small amount. I also separate in my reason actual bankruptcy and basic bankrupty. In actual bankruptcy, there is no money left in the bank to pay the bill collectors. In basic bankruptcy, there is money at the moment, but the bank account is going down every month and it is only a matter of time that the bank account is empty.
OK, AMD isn't quite bankrupt, but AMD is still bleeding money. It was estimated to loose .49 per share in Q4 before it took the write down for ATI. With 603 million shares, that .49 loss amounts to $295 million. Including the write down from ATI, it will be a lot worse, but how bad isn't known yet. The next few quarters are estimated with losses of over .30 cents per share at best. That does not take into consideration any effects of the general slowdown in the US economy or any further problems within AMD. It assumes that AMD will produce and get to market the B3 stepping chips, etc. These continued losses will effectively wipe out any cash reserves that AMD has. If the stock price for AMD continues to slide, it will be in major trouble before long, if it isn't there yet.
Thus my reasoning that to look at AMD in the total view, it is basically bankrupt, though it is not actually bankrupt at this point in time. My sincere desire is that somehow the revised B3 chips get out in a decent timeframe, and that they sell well. But even Hector said at the analyst's meeting that he doesn't expect a profit until Q4 09, and if the total economy of the country continues to be troubled, he may be a bit too optomistic. AMD desperately needs some positive cash flow, as everyone can acknowedge. Whether or not it will get that, no one really knows at this point.