AMD Selling, Leasing Back Austin Campus to Raise Cash

By Kevin Parrish
published

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.

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Kevin Parrish
22 Comments Comment from the forums
  • edogawa
    I hope AMD restructures, and comes back into the game strong again; Intel needs competition.
    Reply
  • GabZDK
    Who would say a console would bring so much hope to the PC market??
    PS4, you need to succeed so that AMD can bring on full badass mode, that is an order
    Reply
  • DRosencraft
    With the upcoming Haswell from Intel looking to be a much more modest step for them, AMD has an opportunity to build up some sales come this summer and fall, and hopefully that will put them in place to do more spending on innovations and improvements on their forthcoming offerings.
    Reply
  • ta152h
    DRosencraftWith the upcoming Haswell from Intel looking to be a much more modest step for them, AMD has an opportunity to build up some sales come this summer and fall, and hopefully that will put them in place to do more spending on innovations and improvements on their forthcoming offerings.
    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.
    Reply
  • Marco925
    ta152hHaswell 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.
    They said that about ivy bridge in comparison with sandy bridge, the performance gains of ivy bridge were negligible at best.
    Reply
  • velocityg4
    I wonder how much of that $164 million will end up as bonuses for executives?
    Reply
  • dragonsqrrl
    Marco925They 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.
    Reply
  • iamtheking123
    Marco925They said that about ivy bridge in comparison with sandy bridge, the performance gains of ivy bridge were negligible at best.No. It was around 10% faster with lower power consumption.
    Reply
  • Blessedman
    I know I am going to get a lot of boo's but Apple sure could step in here and have it's own CPU house...
    Reply
  • silverblue
    iamtheking123No. It was around 10% faster with lower power consumption.More like about 4% faster.
    Reply