AMD Selling, Leasing Back Austin Campus to Raise Cash
It's part of AMD's plan to reduce investments and capital in non-core parts of the business.
AMD said on Tuesday that it has entered an agreement to sell and then lease back its "Lone Star Campus" in Austin, Texas to Southwest Parkway Holdings, an affiliate of real estate investment company Spear Street Capital. The transaction is expected to close around March 26, and will generate approximately $164 million in cash for the struggling chip maker.
According to the deal, AMD will enter into a 12-year lease with an extension option to continue its operations on the campus. Meanwhile, money generated from the sale is expected to be reflected in the company’s first quarter 2013 financial statements when reported on April 18. There will also be a special $50 million charge primarily related to the difference between the sale proceeds and the property's carrying value.
This isn't the first time AMD has pulled the sell-and-lease-back scheme, as the company sold its Sunnyvale, California headquarters in 1998 and is currently leasing it back. It also pulled the sell-and-lease-back maneuver with the major site in Markham, Ontario, Canada in 2008. Needless to say, this isn't anything new for the APU maker.
"As we reset and restructure AMD for long-term success, we are taking a number of steps designed to optimize our business and monetize assets," said Devinder Kumar, chief financial officer of AMD. "The sale of our Austin campus will unlock a significant amount of capital, while the multi-year lease back of our Austin campus reconfirms our long-term commitment to the city that so many AMD employees have called home since 1979."
AMD said the sale of its Austin campus is part of the company’s strategy to reduce investments and capital in non-core parts of the business, including real estate. Currently AMD employs approximately 1,900 people in the Austin campus.
PS4, you need to succeed so that AMD can bring on full badass mode, that is an order
Haswell is a modest step???
It's going to have at least 10% better IPC, considerably higher in HT use. IB already rapes anything AMD has out. Hell Core 2 from 2006 still has better IPC than anything AMD has now.
On top of that Haswell will be very energy efficient, and absolutely decimate AMD's Piledriver derivatives in performance/watt. It's so far ahead of anything AMD has, the relative positions of the companies in that sector will remain - Intel getting people who want quality, performance and power efficiency, AMD competing for those who can't afford the best, don't need the best, and can get by with "good enough" since nothing they require would benefit from anything better.
Jaguar will be their opportunity, not vastly inferior higher end chips, which offer no real competition except for the fact Intel wants higher margins, and lets AMD price lower and suffer low margins.
Jaguar is better than anything has in that market.
Let's also keep in mind, it sounds so lofty that they want to lower their investment in non-core assets, etc... The reason is they're piss-poor. They're burning cash, and their credit rating is below junk. They aren't doing this because they want to, they're doing it because they have to. They're going to lose a massive amount of money in the first quarter, and a lot in the second. Let's hope once Jaguar starts hitting its stride they'll stop the burn, and start turning things around, but at the earliest that's the third quarter, and could be later as well.
Paying 10.4M a year in rent sucks, but it beats going out of business. 164M buys them at least a quarter, hopefully more if their cost cutting is working, to get things turned around with Jaguar, and their new video cards. Plus, their new software initiative that they say only works on Richland and Jaguar could make a difference - no one cares about technology except for what it can do, and AMD finally launching applications that take advantage of hardware is a big next step that could give AMD based solutions an edge, despite the disadvantage in CPU technology. It's about time they leveraged their GPU.
They said that about ivy bridge in comparison with sandy bridge, the performance gains of ivy bridge were negligible at best.
Umm, who? That's news to me, as far as I know Ivy Bridge was never meant to provide a large jump in processor performance, nor was it ever expected to by legitimate sources. I think most informed enthusiasts basically knew what to expect from Ivy Bridge based on Penryn and Westmere before it.
No. It was around 10% faster with lower power consumption.
More like about 4% faster.
Overall, IPC is starting to matter less and less. As long as intel continues to keep 6+ core processors price prohibitive and exclusively for the professional market, AMD will win every time in multi-threaded arena. And considering that more and more developers are creating software that utilizes multithreading, single core IPC is becomming less important.
AMD wins in GPU, APU, and multi-threaded CPU to price markets.
Intel wins in IPC, workstation, and marketing. Ask anyone who intel is and they will tell you about those stupid blue-man commercials. Ask those same people about AMD and they will stare at you.
They laid off, sold their factory and now their campus.
Sure, in the short term, they make some $$ that Rory Read willl undoubtly claims to be from his great market vision.
But in 15 years or so, it will have all been swallowed by the rent that they will still have to pay...
Outside smartphone and tablets, the interest of Haswell is not in the CPU but the integrated GPU that might be twice faster than IvyBridge.
The only benchmark in favor of AMD will vanish this summer...
I too hope AMD has few aces up their sleeves. PS4 is one of them.
Even Intel's GT3 IGP will only barely match AMD's Trinity IGPs from last year so AMD's APU refresh should put them ahead again in that department. Intel might catch up with AMD on the IGP front on a same-year-model basis with Broadwell next year if they go with another 2-3X performance leap.
NO
too true, although intel is already raping the market price-wise
Here's a quick rundown on a bunch entering servers and where they're heading:
http://www.theregister.co.uk/2013/01/02/arm_server_future/
Not much of a jump to make things run on the desktop either for anyone. NV has Denver (desktop) & Boulder (server) coming 2014/2015. IF AMD goes bankrupt and I'm running NV, as the only discrete gpu maker, I'd block all Intel machines from using my cards once gaming isn't directx oriented
The 164mil here for AMD won't do squat to stop another Billion loss this year. AMD will need more funding as they lost 1.18B last year, and have ~1B left. Consoles and Arm profits are 9months out at best. This is a challenging year for AMD and their credit is already junk bond status. That makes borrowing even more costly going forward. I really hope AMD gets bought soon and backed by Billions (IBM, Samsung, Qcom could all do this easily).