Advanced Micro Devices is wading into the debt markets to raise money for a whole bunch of things it needs to get done. The chip maker designer and peddler said in a statement that it would be making a private offering of $300m in senior notes due in 2022, and that it had a number of potential uses for the funds. Four, to be …
Applied Micro is already public and already sells embedded processors and communications chips that are doing somewhere around $230m a year in revenue. The company has $96.1m in the bank right now, too, and a market cap that is around $366m as El Reg goes to press.
So a company with money in the bank and a fairly decent and stable revenue stream is valued at $0.5bn, while a company with no stable revenue stream, and no actual product, apart from filling the buzzword bingo of the month, is valued at over $100bn?
How does this make sense?
It doesn't make sense. But our financial markets are obsessed with immediate payout based on changes in value, rather than actual value.
AMD has never made sense
However, since AMD is such a political entity, it might just be a political game. I don't know about the situation now, but many years ago they withheld bad financial news because they didn't want to hurt a Republican friend who was running for president at the time. As soon as the election was over, they suddenly announced the layoffs. Now the political situation is reversed, so I wouldn't be at all surprised if they are playing the opposite game.