AMD Jumps on Spinoff Buzz

AMD has seen its sales slump, and lost a cumulative $4.3 billion in the last six quarters, as the company has faced fierce competition from Intel and suffered from delays in releasing its new products.

It's been more than a year since AMD first announced it was exploring shifting to a so-called asset-smart strategy, in which a greater portion of its chip manufacturing is outsourced to third parties. But AMD CEO Hector Ruiz has been tight-lipped about details, contending that to do so would tip the company's hand to competitors.

AMD currently owns two manufacturing facilities in Dresden, Germany, and has the option to build a third facility in upstate New York. Using contractors to manufacture its chips would potentially save AMD billions of dollars in capital expenditures, at a time when the company is losing money and weighed down by $5 billion in debt.

During AMD's quarterly earnings conference call last month, Ruiz said AMD was making "tremendous progress" in finalizing an asset-smart strategy and hoped to share details in the near future, which he described as anywhere from 90 days to the remainder of the year.

Thursday's annual shareholder comes earlier than that time frame, and the venue also struck some observers as puzzling. Shareholder meetings are not typically big on news announcements, and the events usually receive little press coverage unless a significant shareholder resolution is being voted on by shareholders.

American Technology Research analyst Doug Freedman says AMD's stock run-up may also be the result of excessive shorting.

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