Advanced Micro Devices, Inc.
) has signed a conditional put-and-call option agreement to sell
its Singapore subsidiary, Advanced Micro Devices (Singapore) Pte
Ltd. and lease it back. It will not only generate additional
funds but also diversify its business beyond the struggling PC
The company has decided to sell its Singapore facility to HSBC
Institutional Trust Services (Singapore) Limited. The transaction
will be closed after the final approval of the JTC Corporation
(JTC), the Singapore entity tasked with managing the country's
Following the deal, AMD would enter into a 10-year sub-lease
to continue its operations in a portion of the facility.
Upon the completion of the deal, the company expects to
generate approximately $46 million (59 million Singapore
dollars). During the third quarter, AMD expects to record a gain
of approximately $16 million. The proceeds will likely be
reflected in the company's third-quarter 2013 financial
statements when reported on Oct 17, 2013.
The sale is yet another effort by the company to reduce
investments and capital in non-core parts of the business,
including real estate. In March, the company signed an agreement
to divest its campus in Austin for approximately $164 million in
AMD is the world's second-largest maker of microprocessors. In
the last reported quarter, AMD's top-line numbers were better
than its guidance, supported by new products and strong mobile
design wins. Also, the company's bottom line beat the Zacks
Worldwide PC sales have been stagnant in recent times while
smartphones, tablets and other mobile devices have witnessed
strong growth. Therefore, AMD is providing chips for game
consoles to lessen the company's dependence on the declining PC
Also, the company plans to diversify its business into new
embedded markets, including communication, industrial and gaming
among others. It expects to increase revenue contribution from
its embedded business and increase market share
Currently, Advanced Micro has a Zacks Rank #2 (Buy). Other
stocks that are performing well at current levels include
). All these stocks carry a Zacks Rank #1 (Strong Buy).
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