AMD to buy back ‘undervalued shares’
But only $300m-worth
AMD is to buy back up to $300 million worth of shares to "assist in offsetting dilution from stock issuances under our employee equity incentive".
The company reckons that its shares are undervalued (it certainly trades at a massive discount to the multiples afforded Intel) and says the buyback "represents a sound investment at its recent trading prices".
But is this really an efficient way of allocating capital? Buying $300m worth of stock to pay staff certainly won't do that much to support the share price, and if the share price falls, it won't do too much for the shareholders either.
While we're on the AMD corporate finance front, it may be worth mentioning Slashdot's careless post today concerning "speculation on AMD buying Transmeta".
"According to a report on CNBC, it appears AMD is interested in purchasing Transmeta," or so says Slashdot.
The CNBC article is actually an attempt to nail down as false rumours that AMD wants to buy Transmeta, and explains the lack of need that AMD has for the code-morphing, cash-crunching, wonder-stock.
AMD buying Transmeta? Now that would be stock dilutive. ®