AMD buy back is masterstroke

Tax loophole

  • alert
  • submit to reddit

Providing a secure and efficient Helpdesk

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. ®

Providing a secure and efficient Helpdesk

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Apple CEO Tim Cook: TV is TERRIBLE and stuck in the 1970s
The iKing thinks telly is far too fiddly and ugly – basically, iTunes
Huawei ditches new Windows Phone mobe plans, blames poor sales
Giganto mobe firm slams door shut on Microsoft. OH DEAR
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Apple Pay is a tidy payday for Apple with 0.15% cut, sources say
Cupertino slurps 15 cents from every $100 purchase
Forget silly privacy worries - help biometrics firms make MILLIONS
Beancounter reckons dabs-scanning tech is the next big moneypit
Microsoft's Office Delve wants work to be more like being on Facebook
Office Graph, social features for Office 365 going public
prev story


Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
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?
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.