Advance Micro Again Seeks Holder OK For Major Spinoff

By Benjamin Pimentel

After failing to get enough votes for a blockbuster spinoff, Advanced Micro Devices Inc. (AMD) will try again to get shareholder approval for a plan that most analysts see as critical for the chip giant's financial survival.

AMD shareholders will meet in Austin, Texas, on Wednesday to vote on the company's proposal to spin off its manufacturing facilities to form The Foundry Co. in a joint venture with Abu Dhabi's Advanced Technology Investment Co.

AMD, a Sunnyvale, Calif.-based chip giant, said last week it had postponed a scheduled shareholder meeting because the company failed to meet the required 50% quorum, though it had received 97% of the roughly 42% shares cast.

"We are confident we will reach the required shareholder quorum and we believe the time required to reach that quorum will not impact our ability to close the transaction in the next few weeks," AMD spokesman Drew Prairie said.

Still, he declined to comment on "where we stand relative to reaching the quorum for tomorrow's meeting or whether we will need to adjourn to secure additional votes."

Many analysts say they expect AMD shareholders to approve the plan, which would mean a major cash infusion for the company which could ease the struggling chip maker's financial woes.

Analyst Craig Berger of Friedman, Billings, Ramsey & Co. said AMD apparently did not give major shareholders enough time to make a decision and vote on the proposal. "They kind of rushed this one and perhaps didn't give investors enough time," he said. "The shareholders definitely want to approve it because AMD would have some serious liquidity problems coming up if they don't get the cash.

In a research note, Wachovia analyst David Wong said, "the completion of the deal is crucial to the value of AMD's stock, and AMD's ongoing viability, and so we expect that AMD will manage to secure shareholder approval."

But he also said, "We do think that with any transaction there is always some amount of risk until the deal is actually completed."

Analyst Roger Kay of Endpoint Technologies Associates said the "deal has to close."

"AMD needs the dough to finance operations - that's the most immediate issue," he said.

Analyst Brian Piccioni of BMO Capital Markets said even another delay could be bad news, though he said, "I can't imagine why a shareholder would vote against the spin out."

"As I understand it, they could delay the meeting, if they can't get a quorum," he said. But "usually, the longer you delay, the greater the risk of what you want to happen happening in the way you want it to happen."

-By Benjamin Pimentel; 415-439-6400; [e-mail]