For the past few months, there's been a persistent rumor that AMD
would sell its Austin property and lease the building back in a long-term deal that'll net the company some short-term capital. Initially, the transaction was expected to bring in between $180-$200M, but the final value is a bit below that. The company released a statement today stating that the deal will bring it an additional $164 million, which will be included in its first quarter results.
AMD has spun the move as in keeping with Sunnyvale's desire to "reduce investments and capital in non-core parts of the business. In 1998, the company sold and currently leases-back its headquarters in Sunnyvale, Calif. In 2008, it sold and currently leases-back its major site in Markham, Ontario, Canada.
"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.”
Of course, there's a flip side to this arrangement, and it's not hard to see the pattern. In 1998, AMD was battling to bring Athlon to market and facing fresh competition from Intel's Mendocino-core Celeron. The 2008 Markham deal was another low point for AMD; the company was rocked by vast writedowns on the value of its ATI acquisition, and Phenom's disappointing performance and much-publicized TLB bug.
AMD isn't "divesting itself of non-core assets." It's struggling to survive. This deal will bolster AMD's cash reserves, which is critically important. Multiple analysts have questioned whether AMD can make it through the end of 2013 and survive long enough to aggressively launch products, which is why the $165M in cash is so important at this juncture.
AMD is still exploring options for selling further property and has put its Building 3 property on the block as well. It notes that this structure is largely empty and that it'll move the operations that remain there to other properties. AMD also announced its new Richland APUs
today; the new chips are a marginal refresh of the Trinity
platform AMD launched last year. The new chips are meant to help anchor the company's products before Kabini
, and Kaveri
launch between now and the end of the year.