Advanced Micro Devices, Inc. (NASDAQ:AMD) Gets Warning of Bankruptcy: M/A-Com Technology Solutions Holdings, Inc. (NASDAQ:MTSI)
Shares of Advanced Micro Devices, Inc. (NASDAQ:AMD) [Detail Analytic Report] were gaining momentum with almost 2% on Wednesday premarket session as a private investment manager Kerrisdale Capital cautioned that AMD would go bankrupt by 2020 and with Zen not appearing until the end of this year they were slightly worried that the outfit didn't have enough to survive what will be a dismal year. Kerrisdale cautioned that dependence of AMD on the stagnant PC market, where it has repeatedly been marginalized by Nvidia and Intel, would doom the outfit. While AMD has expanded its business into new markets such as augmented and virtual reality, but has failed to dominate a single market.
However it looks like the firm might be safe for now. The outfit's cash and equivalents plunged just 2.5% annually to $785 million last quarter, and its total debt only rose 2.3% to $2.26 billion. It is unlikely that any new debt should come due until 2019. AMD's non-GAAP free cash flow dropped from $94 million a year ago to $21 million, but at least it remains in positive. Certainly this means that the firm won't go bust before Zen appears although it does mean it can't invest much money on R&D, marketing, or buyouts to remain competitive. This could stuff it up when Zen actually release. So it does mean that Kerrisdale's dire forecast is still on the table.