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I will weigh in on the debate whether or not to favor shares of XLNX or AMD now prior to to deal closing. I have not been reading every single thread but I don't think this has been mentioned yet.
Yes, of course there is a premium for arbitrage as there should be, but I think the risk of just owning XLNX by itself is being underestimated from the conversations I have seen so far. I, myself am one of those that do not elect to capture the arbitrage premium not only due to the risk of XLNX falling on a no deal but in addition I believe you may see a 10-15% spike in AMD simultaneous to the drop in XLNX. Why...because the re-valuation of AMD ex-XLNX is a faster growing more narrowly focused company and I believe the street would capture the deferred appreciation that normally would have occurred after the Q3 conference call and report. Therefore the risk is greater than just a 30% downside ....maybe a 40-45% differential. Too much risk for the arbitrage reward for my blood.
A Happy Thanksgiving to all AMD Longs, we have much to be grateful for!!!
Cheers to looking at a wonderful Christmas season in AMD!
Thank you Lisa Su for your hard work and dedication, driving nimbly past the other tech giants!
Why would anyone think it would take a year for approval of the XLNX buyout? How is it any different than INTC buying ALTR from a regulatory standpoint? That deal closed in 7 months.
For those interested; I just received this some minutes ago.
"Under the terms of the agreement, XLNX stockholders will receive a fixed exchange ratio of 1.7234 shares of AMD common stock for each share of XLNX common stock they hold at the closing of the transaction. This all-stock transaction was valued at approximately $35 billion as of the date of the announcement. Any changes in AMD’s share price after the announcement date will not change this fixed exchange ratio but will change the overall value of the transaction accordingly."
The value of the deal of $35B at announcement will therefore change at the 1.7234 ratio to AMD's pps at the time of the deal if this goes through. AMD IR have therefore replied.
AMD Big Navi graphics cards could be in short supply well into 2021
As custom RX 6000 graphics cards sell out in a flash
As custom RX 6000 graphics cards sell out in a flash
As custom RX 6000 graphics cards sell out in a flash
When will AMD break $100? Analysts continue to upgrade AMD to $100.
But does the Merger cause AMD to stay Rangebound in the $80’s? If so then Why?
Lisa su announces possible plan to expand to automotive industry if the deal with xilinx goes through
Buying Xilinx is a way to get an extra 10% boost on shares of AMD.
Currently Xilinx at $137 is trading at a 1.57 multiple of AMD $87. The difference between 1.57 and 1.7234 is the fear gap that the deal will not happen.
We all are hoping that the stellar Q3 performance will give AMD a 14.9% boost to $100 before Christmas.
Let’s assume three things... the deal and $100 AMD happens and the 1.57 multiple that has established itself since October continues leading up to Christmas.
The conclusion is that when AMD is $100 then Xilinx is $157.
AMD rose $13 and 14.9%
Xilinx rose $20 and 14.6%
However if this were to be at closing Xilinx would be the full multiple of $172.34 per share at closing instead of $156.
AMD rose $13 and 14.9%
Xilinx rose $40.02 and 25.8%
This is getting an extra 10% of AMD for your money by trading on the fear gap.
Well, I just added 2 more AMD shares @ $86.88 to my long-term portfolio (LOL). Was looking for a dip this week. Decided pps was holding up so well that it didn't make sense to hold off any longer on my tiny purchase. Looking forward to continuing growth of the next BLUE-CHIP tech stock. Best regards to all longs! :-)
AMD to deliver faster CPU performance and undervolting with PBO 2
"Most AMD CPU users and PC enthusiasts will be well aware of the original Precision Boost Overdrive one-click overclocking technology from AMD. The feature intelligently leverages the large array of sensors (continuously checking volts, amps, temperatures) built into Ryzen processors to determine whether it is OK for the processor to boost higher. It could easily deliver performance increases in double figures, depending upon your system and the task at hand."
At the moment the Xilinx share price is at $133 and AMD around 85, that makes the Xilinx share price about 1.5x times AMDs. There is still a rough 0.2 difference to the guaranteed 1,72x 20%, in case the deal get thru. So you want to buy AMD shares, buy Xilinx and get 17% more value in AMD (unless AMDs price is not dropping). If the deal does not get accepted Xilinx might drop as much as 25% to the old ratio like at 30th of September 2020 before the rumor started, when Xilinx was at $104 (and AMD at $82)
That is is your risk, A major loss with your than still Xilinx shares versus a higher gain with your than AMD shares. But since the market is somehow crazy anyway short term everything is possible - so in the case the merger do not go thru even Xilinx might goes up (considering to stay a "solid" proftibale, independent company) and AMD going down (since some of the advantages of the "megrer" would not materialize).
Remember Jan 2020 Xilinx shares price was around $100 before the Corona drop and AMD was around $50 - so a Xilinx share priece way above that 1,72x AMD...
Based on September 30th numbers (before the rumor started) that 245M Xilinx shares at $104 represented a marketvalue of $25.5B, transferred into 422Mio (1,72x) AMD shares it would have been $34.5B, a 35% premium that day. But neither that extra 4220Mio shares, nor that premium are in any way diluting AMDs value - Xilinx has its own marketvalue, they pay dividends, their sales, profits, cash per share are way "better" than AMDs numbers and that all adds up to AMD sales, profits, cash!!
Now recalculate (I dont have the time) all that numbers but based on the combined sales, profits and divide it by the future AMD number of floating shares (1,2 Billion plus that 422Mio) and we might see even an improved AMD EPS etc. - so the 35% premium is IMHO on a first view more than justified.
Again all the discussion about the Xilinx.
Kris call it nice - the fear gap - the difference between the 1,57 multiple to the 1,72. And I am with Kris, that it will not take a year to get the deal thru.. just think about when there is their next annual shareholder meetings! And than it is fact, still need some time to perform but the deal is done and the gap closes. The major # of shares are anyway with banks, funds etc. and they see the value (in $) of that deal (besides they might loose with their Intels holdings).....
I have no idea what will happen when the deal is not going thru but I do not bet on that it reverse the price movements the day the rumor went public or the day it was confirmed: AMD going up a few precent and Xilinx 20..30% down.
IMHO it can come in exact the other way - AMD down because of that lost opportunity and Xilinx going up staying independent...Xilinx was in Jan two times the AMD price, is a very solid company with better key numbers like EPS, dividend, huge growth in certain markets and their share price simply lacks behind the recent months! The question is allowed - is 1,72x a steal? Keep in mind AMD is not a white knight rescueing Xilinx - so if rejected I expect AMD going down even more than Xilinx. But the deal goes most likely thru..it is speaking for itself that there is only a 10% upside reward to 30% downside risk in the share price.
And unlike Dan and others question an Xilinx investment just because of 10%...and "could easy make that money in other stocks" or others recommend better buying directly AMD...well let me tell you Xilinx' share price is following AMDs like Siamese twins so if you go Xilinx you make all gains AMD is doing. And a constant 10% "fear gap" equals even more $ when AMD is up...and it will not take a year from now...
From the new Investors Business Daily article out- My fav comments-
"RBC Capital Markets analyst Mitch Steves on Monday reiterated his outperform rating on AMD stock and raised his price target to 100 from 92. In morning trading on the stock market today, AMD stock rose 2.9%, near 87.10.
In a note to clients, Steves updated his long-term thesis on AMD stock to include Xilinx. He sees "notable margin expansion" from economies of scale and cost-savings synergies related to the acquisition".
"AMD stock has formed a double-bottom base with a buy point of 88.82, according to IBD MarketSmith charts".
GO AMD!!! GO LISA!!!
AMD stock price will shoot to the $300 in around 2 years, when AMD and Xilinx release their sonergistic new products.
Dr. Lisa Su bought Xilinx for multiple brilliant technological and busibess reasons.
Xilinx is already working on products thst use AMD's SAM (Scalable Access Memory) that will allow Xilinx FPGA processors to access the RAM directly, like CPU's and AMD 5800 GPU's now do.
In addition, AMD new generation of cpus, gpus, apus, etc. will now have their internal bandwith increased by a magnitude times by using Xilinx incredible high bandwidth hardware, software, SOCs, etc.
With the latter Xilinx/AMD IP, the Infinity Fabric performance will allow the development of the most powerful processors in the market with lower power consumption, smaller size, and without compromising performance and on the contrary, allowing incredible levels of performance.
AMD and Xilinx IP is one of the most powerful combinations to create new unique igh pergormance archtectures and products.
As goes the famous quote "I do not want a good General, I want a lucky one" - Napoleon
Well AMD is like a perfect storm. Not only is AMD good at what they do, AMD is lucky to.
I understand that one makes ones own luck. To a degree that’s always true. For example the RyZen line was introduced during a PC cycle slump. I truly believe that AMD products were so exciting AMD single handedly reversed the PC slump caused by past Intel sloth. That’s making your own luck.
And everything Dr Lisa Su did, she did to prepare for stiff Intel competition. Then Intel stumbles and never rises to the challenge. That’s just luck.
But wait the economy is tanking! COVID-19 is shutting things down. AMD will be hurt. No, COVID-19 ends up being a stimulus. That’s just luck.
AMD, the perfect storm of success!
Re RBC PT raise from $92 to $100 - looks like it doesn't include new TAMs, just "synergy" out of Xilinx merger. Analyst cited communication segment as a synergy additional revenues growth. While this is true, it's just existing TAM with more selling opportunities through merged channels. This is no new product possible with the combined IP circuit designs of both companies.
AMD already is active in communication segment aka telcos. See its Sep 2019 EPYC Rome launching with Nokia showing performance data for packets processing. Xilinx of course sells to telcos too such as the 5G infrastructure, using their FPGAs and other accelerators. Those combined channels allow for cross selling the products of both companies resulting in a bit higher revenues as RBC has noted.
But... THIS IS NOT A NEW TAM for both I'm talking about.
Here's my example of a new TAM. Datacenters Networks! Yes, combined companies could create products to use as networking in datacenters just like Mellanox. But no not hardwired networking processors. Xilinx already has an offloading chip to process packets at the server side. The actual switching chips isn't there. However the combined companies could offer a software defined switch and network with EPYC as the packets processing of routine etc functions, just like Nokia has shown last year, and using circuits from Xilinx to physically connect to the links with the right physical signaling standards.
I hope someone can understand this example. ..it's not yet accounted for with RBC 5 years model. Obviously there are other examples of new TAMs I've previously mentioned.
Hence RBC upgrade isn't yet all that is to account forbin this new 5 years roadmap and growth.
AMD could have an analyst day to discuss such new 5 years plan as 2020 is the last year of the former 5 years plan.
Here's what RBC stated on its upgrade - tiny revenues considered, it's not the reason for the $35B merger obviously. .. :
"AMD price target raised to $100 from $92 at RBC Capital RBC Capital analyst Mitch Steves raised the firm's price target on AMD (AMD) to $100 from $92 and keeps an Outperform rating on the shares. The analyst is updating his model following the company's pending merger with Xilinx (XLNX), stating that while it is difficult to predict the growth rates of the combination over the next 5 years, he sees potential for $300M-$600M in communications revenue synergies within the first 12-18 months post closing. Steves adds that he expects a "notable" margin expansion for AMD due to economies of scale, with no change to his theses of market share gains for the company's core CPU business and its upside from a growing Data Center Graphics opportunity."
AMD price target raised to $100 from $92 at RBC Capital
RBC Capital analyst Mitch Steves raised the firm's price target on AMD (AMD) to $100 from $92 and keeps an Outperform rating on the shares. The analyst is updating his model following the company's pending merger with Xilinx (XLNX), stating that while it is difficult to predict the growth rates of the combination over the next 5 years, he sees potential for $300M-$600M in communications revenue synergies within the first 12-18 months post closing. Steves adds that he expects a "notable" margin expansion for AMD due to economies of scale, with no change to his theses of market share gains for the company's core CPU business and its upside from a growing Data Center Graphics opportunity.
AMD new laptop CPUs + roadmap till 2022
Wall street finally sees the value of merger, increasing demand of gaming chips, boost in server sales, 300 mln to 600 mln revenue synergies within 12-18 months post closing.
RBC hikes chipmaker's PT to $100 from 92 on promising merger synergies with Xilinx Inc.
New AMD APUs incoming
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