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Advanced Micro Devices, Inc. Message Board

  • mchickam mchickam Apr 13, 2007 12:32 PM Flag

    what will add'l shares do to stock price?

    "The company is moving to increase its number of authorized shares of common stock from 750 million to 1.5 billion, a move that must be approved by shareholders at the chipmaker's May 3 annual meeting." - marketwatch.com

    What does this mean to current share value?

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    • There was a thread on another board where a fund bought ALL the shares of a stock, yet on the subsequent day, ten times that number were traded. How does that happen?

      Well, in the above case, the brokerage firm that allowed those short sales to go through was on the hook for the shares. In effect, they were taking a big risk because, sooner or later, those made up shares had to be bought back by that same firm. That is a pretty dumb position to take and, perhaps, why Fidelity does not engage in such a practice, at least according to the Rep.

      I simply do not believe that can, legally, be done.

      Still, to say it is impossible would be like using the "NEVER" word which I have learned over the years to not use as it will, sooner or later, return to slap you in the face.

      FWIW,

      H

    • I read this discussion with amusement. There are good points made in this thread but all of them just tell a piece of the story. I have no idea how doubling the shares will ultimately shake out, but would add one more thing to ponder.
      Remember AMD recently took over ATI. The shares outstanding now are pretty close to what they were before the buyout. Again I have no idea if this buyout will ultimately prove a positive, but bear in mind currently ATI is contributing zero to AMD's profitability. If the AMD party line is accurate and the ATI part of the business starts turning a profit, then that certainly would justify additional shares, with no downtick to the EPS.

    • Your broker is correct - only shares held in margin can be shorted.

      However, that is nearly all of them, and have you ever had a case where they wouldn't take your order to short sell?

      There was a thread on another board where a fund bought ALL the shares of a stock, yet on the subsequent day, ten times that number were traded. How does that happen?

      Truth is, they don't track or limit the short sales.

    • As far as AMD is concerned, PE has gone the way of the T-Rex it does not exist any longer. So this talk of what effect the issuing and proceeding unloading of Shares by AMD at bargain basement prices, has nothing to do with PE and has everything to do with the share price lowering as double tha amount of share holders try to survive on the meager crust which is what is left of AMD at the moment.

      Just like AMD has not been able to rally from the downward spiral, no new AMD investor buying these additional shares will accept them with out guarantees. So that is why there is talk of convertibles high reward bonds that can be traded for low priced stocks at a certain time. That certain time will be when AMD is doing well again. The effect of millions upon millions of cheap shares showing up as traders are trying to keep AMD on a upwards mode will devastating due to the fact that both the stock price and the amount of shares outstanding will be effected when each of these convertible trades have been recorded. In other words the warm happy feeling the AMD long received at the previous closing will be be shattered by the news that 50 Million shares had been purchased at 10 and just been sold at 30 wiping out all gains for longs.

      So in fact, a desperate AMD is creating ghost shorts that will convert there bonds to shares when the price is right and wipe out the gains of all others that did not purchase into the fire sale bond issue. If AMD does not raise their stock price these bond holders will make a good but risky return off of AMD so that part is covered.

      In other words folks AMD is a sinking ship and Hector and the board are acting as rich passengers that are paying off the crew to lock the shareholders in their lower deck quarters in order for Hector and the board to get their choise of life raft. This caring less for the stockholder could not have been more evident then when AMD continued to lower ASPs and margins even though AMD knew that it was a full process behind Intel in shrink and wafer size and was receiving 40% less yield from each wafer. It was suicide to sell their chips to HP knowing this truth about themselves that their chips where costing AMD 40 % more to produce for the last full year.

      The Hector story would have made a brilliant Austen Powers movie scene where Hector is Doc Evil played by Michael Meyers.

      Hector is threatening the world leaders with price reductions but his sinister cohorts representing shareholders are trying to get his attention. "what is it" Hector asks
      "well boss if you do that we share holders will suffer and the world will be happy, we really do not want to make the outside world happy do we. the shareholders timidly plead.

      Hector with out recognition of his trusted cohorts announces "we will go on with my plan for world domination, I will make top end CPUs cheaper than hard drives and thus have the love of the consumer and OEMs."

      "But boss we are losing money already by making the OEMs and customers happy and your plan will continue to do sooooooooo" as the shareholders are dropped from their seats around the table into the burning pit.

      Hector with a half grin on his face hisses " shareholders are a dime a dozen true friends such as Dell and HP are worth more than 750 million share holders". As another 750 million shareholders just suddenly appear around the table.

      The End

    • It is hillarious to see retards talking about dillution as if they understand the big picture.

      AMD sells the stock and gets money in return. That money adds to the value of existing shares if unused. You get it? There is no net effect to share value just becasue the transaction occurs.

      However AMD will use the money to pay down debt, this will make AMD more profitable going forward. AMD will use the money to grow the business. This will make AMD more profitable.

      Would it be better if AMD didn't have to do this? Sure. But as of this momet, AMD is priced so low that a secondary would make the stock go up.

 
AMD
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