S&P may upgrade Advanced Micro

Standard & Poor's said it placed Advanced Micro Devices Inc.'s ratings on CreditWatch with positive implications, including the B corporate credit rating, B- $500 million convertible senior debt due 2022 and B- $600 million senior notes due 2012. S&P plans to raise the corporate credit rating to B+ from B and assign a stable outlook following completion of the planned equity offering.

The CreditWatch placement reflects the company's improving business and financial profile, the agency said. Advanced Micro Devices has improved its operating profitability through an enriched product line and improved manufacturing performance and has reduced its exposure to the commodity memory industry through the initial public officer of its Spansion Inc. subsidiary.

Further, S&P described the company's 4.75% convertible senior debentures due 2022 as "in the money" and expects them to convert to equity on Feb. 6, provided the company's stock price remains reasonably above the conversion price of $23.38 per share. Also, the company has planned a $500 million offering of common stock, the net proceeds of which would be used to fund the redemption of up to 35% of its 7¾% senior notes due 2012 and for capital expenditures, working capital and other general corporate purposes.

The ratings continue to reflect aggressive competition from dominant supplier Intel Corp. and possible continued negative free cash flows over the intermediate term. S&P said the company is noticeably weaker than Intel in the enterprise desktop and laptop markets and its overall market share, while improving, remains below 20%.

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