* AMD looks to diversify beyond PC industry
* CEO of AMD says he's encouraged by Black Friday PC sales
* Company aims to raise $150 mln to $200 mln with Texas sale
By Noel Randewich
SAN FRANCISCO, Nov 27 Advanced Micro Devices Inc
plans to sell and lease back its campus in Austin,
Texas, to raise cash and fund its chipmaking business as it
diversifies beyond the struggling PC industry into new markets.
AMD expects to sell the 58-acre site for between $150
million and $200 million and close a deal in the second quarter,
company spokesman Drew Prairie told Reuters on Tuesday.
The chipmaker's move to sell its campus, reported earlier by
the Austin American-Statesman, comes as the company and its
larger rival Intel Corp struggle with slowing personal
"There are favorable economic conditions in the part of
Austin where the campus is located," Prairie said. "Contingent
on finding an investor who wants to do a multiyear lease-back,
it's a good opportunity for us to unlock the value of the real
estate to fund operations."
AMD's headquarters in Sunnyvale, California, and a building
near Toronto were sold and leased back in the past, Prairie
The growing popularity of Apple's iPad and other
tablets have sapped demand for PCs. With China's economic growth
slowing while Europe's economy falters and the U.S. economic
recovery is tepid, global shipments are expected to decline
slightly this year - the first annual drop since 2001.
AMD, one of Silicon Valley's oldest chipmakers, has been
laying off engineers while looking for new markets for its chips
as it faces depleting cash reserves.
Earlier on Tuesday, AMD Chief Executive Rory Read told
investors at a conference in Scottsdale, Arizona, that results
from the U.S. Thanksgiving weekend look encouraging for PC sales
although it is too early to make predictions about the entire
holiday shopping season, and the PC industry still faces
"We've seen some positive news out of Black Friday over the
past several days," Read said. "Our performance over that period
looked reasonably well, but I think it's a little early to call
the holiday season."
Sales over the Thanksgiving weekend and the holidays in
general are closely watched by investors. U.S. retailers can
generate a third of their sales and up to half of their annual
profit in November and December.
Read reiterated that he does not expect the PC market, which
accounts for about 85 percent of AMD's business, to recover for
AMD has hired JPMorgan Chase & Co to explore its
options, although an outright sale of the company is not the
main option, according to sources.
Like Intel, AMD was caught flat-footed in recent years with
the emergence and fast growth of mobile devices.
With the company burning through cash, analysts have become
concerned about future liquidity. They say AMD needs to turn its
business around sooner rather than later.
Research firm Gimme Credit on Tuesday downgraded its rating
on AMD, which has long-term debt and capital lease obligations
of about $2 billion, to "deteriorating" from "stable."
"The downturn in the PC market, along with market share
losses, have led to substantially lower revenue and margins,"
Gimme Credit said in its report. "Free cash flow is also
decreasing, despite modest capital expenditure requirements."
AMD's cash declined $279 million in the third quarter to
$1.48 billion. AMD said it was reducing its "optimal" cash
target to $1.1 billion from $1.5 billion due to the business'
now smaller size.
Shares of AMD rose 0.5 percent on Tuesday to close at $1.88.