AMD Eyes Intel Cash for Debt, Spinoff

NEW YORK (TheStreet) -- AMD (AMD) will use the cash from Intel's (INTC) $1.25 billion settlement to ease its debt burden and help float a plan for a manufacturing spinoff.

AMD stock jumped more than 10% Wednesday, as investors saw less dire financial conditions ahead for the PC chipmaker after it announced plans to pay down $1 billion in debt.

If AMD's debt reduction and refinancing plans are successful, analysts expect that the company will be free of debt covenants that prohibited the company from separating from its semiconductor production unit GlobalFoundries.

"We believe the spinoff of GlobalFoundries is a key area of focus for investors and believe that a financially sounder AMD Product Co., with an improved capital structure and a newly restructured licensing agreement ... is a major step towards the deconsolidation," wrote Barclay's analyst Tim Luke in a research note Wednesday.

The move would allow AMD to focus on chip design and new products. But the maneuvering does not change the chip market much. AMD still faces the market dominance of Intel along with the expansion of Nvidia (NVDA), the graphic chip specialist moving into computer processing. AMD also faces rising competition from other rivals Qualcomm (QCOM), which is making inroads into netbook computers.

AMD shares closed up 70 cents, or 10.6%, to $7.32 Wednesday.

-- Written by Scott Moritz in New York.

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