AMD Shares Lowest in Years

A downturn in the economy sends stock down.
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SAN FRANCISCO -- Shares of

Advanced Micro Devices

(AMD) - Get Report

hit a multi-year low Wednesday, as economic concerns spread through the chip sector.

AMD's stock was down as much as 6.7% to $10.52 at one point Wednesday, breaching its 52-week low of $11.18. The last time AMD's stock traded at a lower level was on Aug. 23 2003, when it hit $10.24.

The selloff came on a down day for the broader markets, with the

Dow Jones Industrial Average

and the

Nasdaq Composite

both in retreat.

American Technology Research analyst Doug Freedman said chip companies carrying large loads of debt on their books are particularly suffering in the current environment.

With the credit market tightening, there are concerns about the ability of highly leveraged companies to weather a downturn in the economy, Freedman explained.

He pointed out that

Micron

(MU) - Get Report

, which has roughly $2 billion in long-term debt, is experiencing similar treatment on Wall Street. Shares of Micron were down 4%, or 35 cents, at $8.18 in midday trading Wednesday, setting a new 52-week low for the second consecutive day.

It didn't help that a note from Morgan Stanley on Tuesday reportedly characterized Micron shares as "dead money" and initiated coverage of the chipmaker with an underweight rating.

AMD has $5.3 billion in long-term debt on its balance sheet, much of it acquired as a result of its 2006 acquisition of Canadian graphics chip company ATI.

On Monday,

AMD unveiled a package of chips for desktop PCs, dubbed Spider, which combines its latest microprocessor with some of the components it acquired with ATI. AMD is banking that refreshing its product lineup will help it compete with

Intel

(INTC) - Get Report

, which has unleashed a barrage of new chips in the last 12 months.

Also weighing on AMD's stock is the recent

$622 million infusion from an investment arm of Abu Dhabi, the capital of the United Arab Emirates, which according to Freedman dilutes the company's shares by 8%.

Shares of AMD were recently trading down 3.9%, or 44 cents, at $10.84.