Lehman lifeline was critical to chip maker AMD
With Advanced Micro Devices Inc.’s cash reserves dwindling and the chip maker’s overall financial health deteriorating to dangerous levels last year, the company was thrown a lifeline by Lehman Brothers, the investment bank now in bankruptcy. The $1.5 billion in AMD debt that Lehman scooped up in August 2007 demonstrates the important role that banks like Lehman and other investment firms play in helping prop up wobbly companies by pouring money into them when they’re down.
In AMD’s case, Lehman’s problems won’t affect the Sunnyvale, Calif.-based company’s balance sheet, which at the end of June showed AMD holding about $1.6 billion in cash while carrying $5.3 billion in debt. That’s because AMD has already spent the proceeds, and its debt offering was sold off by Lehman to other banks or held by its subsidiaries that are now being sold to other firms.
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