Financial markets more careful
Last modified on Tuesday, 23 September 2008 04:36
The Lehman Brothers bailout of AMD is being seen as a warning to other financial investors, according to Associated Press.
Lehman bought up $1.5 billion worth of AMD debt and it is being seen as one of the factors that contributed to it going belly up last week. AMD's cash reserves are dwindling and the chip maker's overall financial health deteriorated to dangerous levels last year, Lehman saved AMD's bacon, but the message of its bankruptcy is for companies to be a lot more careful in the future.
Now banks are saying that deals like the Lehman-AMD one could be harder to come by with Lehman's bankruptcy and the disintegration or consolidation of other banks. AMD will not be affected by Lehman's going tits up. At the end of June AMD held about $1.6 billion in cash while carrying $5.3 billion in debt.
AMD has already spent Lehman's cash, and its debt offering was sold off by Lehman to other banks. AMD used the cash infusion to pay down debt from its $5.6 billion acquisition of graphics chip maker, ATI Technologies, and for other corporate expenses.
Companies like AMD could also be at a disadvantage in selling short-term debt. Only the strongest, most well-established technology names could get such cash.