Standard & Poor cuts AMD rating; cites 'vulnerable' business risk
Standard & Poor has cut AMD's credit rating to reflect the company's "vulnerable" business risk profile, the credit rating agency said today, and warned that the firm's revenue and earnings may decline even further.
AMD has been struggling in recent quarters against its competitors as the PC market continues to decline in favor of the post-PC market, which is all but entirely owned by rivals. Standard & Poor said that the weak demand for traditional PCs and devices that run on the AMD platform will cause the chip maker to suffer further.
The drop in its corporate credit and senior unsecured ratings just two steps away from junk status "BB-" to "B". AMD's outlook is considered stable, and the chip maker has sufficient liquidity to limp on during a time where it is expected to report further weak earnings.
The upside is that the credit rating agency said that AMD has "an opportunity to stabilize its operating performance in 2013" and has "liquidity sufficient to bridge this period of weak performance." Citing the introduction and launch of new products and recent restructuring efforts, the firm may continue to float for the coming quarter.
AMD said late last year that it was not up for sale, nor would it call in the bankers to evaluate its sale options. The firm reported poor third quarter results and subsequently cut around 15 percent of its workforce. More layoffs are expected this month, according to earlier reports.
AMD's shares remained flat into late-afternoon trading at around $2.70 a share mark, up by nearly 1 percent.