AMD buy back is masterstroke

Tax loophole

  • alert
  • submit to reddit

The essential guide to IT transformation

Yesterday, we expressed some doubts over the wisdom of AMD's $300 million share buyback (see AMD to buy back 'undervalued shares). Today, we bring you two counter-arguments - and pretty persuasive ones at that.

First up, we can thank Isak Swahn for alerting us to this post on Raging Bull's AMD message board Apparently, the share buyback is a wizard wheeze that exploits "the biggest corporate tax loophole in history". You can read how it works here, but you may have to register first.

And next we turn to James Mandell, who argues that the buyback will pump up AMD's share price:

While $300 Million (US) doesn't sound like alot to some people. It is to AMD. Think of it this way. $300m @ $23/share could buy just over 13 million shares. 13 million share is about 5.7 per cent of the AMD share available on the market (known as "float"). The other shares are held by AMD/AMD management.

If Intel were to purchase 5.7 per cent of their "float" it would cost them $13.2 BILLION. Here's a scary thought... AMD is only currently worth about half that, even when you add in the value of the shares "held by AMD/AMD management". Maybe Intel is an 800Kg gorilla?

This is indeed a large buy for AMD. It will take some time to execute and I'd imagine the stock price would go up at least another 10-25 per cent while they do it.

Similar things happened when Fidelity bought in some
time ago... and the opposite when they sold as well I believe.

So there you have it, AMD is a corporate finance genius after all. ®

Boost IT visibility and business value

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Fast And Furious 6 cammer thrown in slammer for nearly three years
Man jailed for dodgy cinema recording of Hollywood movie
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
prev story


Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Scale data protection with your virtual environment
To scale at the rate of virtualization growth, data protection solutions need to adopt new capabilities and simplify current features.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?