AMD intends to sell off its 58-acre Austin, Texas, campus in order to raise cash. The site will be sold for a sum of between $150 million and $200 million in Q2 2013, if things move ahead as planned. The move is to help fund AMD through its diversification into markets other than PCs, reports Reuters.
AMD company spokesman Drew Prairie went some way to explain the move and its timing “There are favourable economic conditions in the part of Austin where the campus is located,” he said. “Contingent on finding an investor who wants to do a multiyear lease-back, it's a good opportunity for us to unlock the value of the real estate to fund operations.” This move isn’t something new and startling for AMD; the company’s HQ in Silicon Valley and some premises in Toronto, Canada, have also have been sold and leased previously.
A fortnight ago we heard reports that AMD had hired JP Morgan to look into the potential break-up and sell-off of the company. The sources at that time said that “an outright sale of the company is not the main option”. Perhaps this is one of the money-making initiatives coming from the JP Morgan consultation. Further restructuring, which seems to be a euphemism for cuts, came to light in October when AMD reported a loss of $157 million in Q3 2012 and that it would be laying-off 15 per cent of its workforce.
We all know it’s much easier to spend cash than to make it and AMD’s cash reserves are currently paying testament to this. The company’s cash pile declined $279 million in Q3, to $1.48 billion. With the recent reductions in the size of AMD’s operations it said that the optimal cash reserves will be somewhat lower at around $1.1 billion.
None of the reports I have read detail the costs that AMD will incur from leasing the premises that it once owned. It definitely seems to be a less long-term strategy. In a way it reminds me of the old people who are persuaded to sell-off their houses to pay for retirement costs. Let’s hope that is not what is happening to AMD and that the money injected from the sale will be used to invest in future leading-chip designs.