Asset Smart is finished. On Monday, March 2, AMD divested itself of certain manufacturing and corporate assets and formed those assets into a second company. Henceforth, the Fabrication Facilities Formerly Known as AMD will be the property of the imaginatively named Foundry Company.

We've covered the details of Asset Smart in the past, including the initial announcement of the deal, so we're going to assume you're familiar with the particulars of this situation and the market realities that led AMD to go "asset smart." If you need a refresher on the history of the company and its various products, check our earlier coverage. Put succinctly, AMD decided to divest itself of its manufacturing assets when it became apparent that the company could no longer afford the enormous expense of attempting to match Intel's process technology and/or manufacturing tech.

Cost curves like those above don't lie; fast forward five months, and here we are. Some of the numbers and investment amounts have changed owing to the steadily deteriorating economy, and the revised deal is as follows: The Advanced Technology Investment Company (ATIC) has paid AMD $700 million for a share of the Foundry Company. That $700 million goes straight to AMD's pocket as much-needed cash—it'll almost certainly guarantee a profitable first quarter—but that's not the only carrot AMD secured with the spin off.

The Foundry Company has assumed responsibility for about $1.1 billion of AMD's debt; the company has not released information on which debts Foundry Co assumed or whether the repayment terms/interest rates on the loans were recalculated. Ostensibly, this should make it easier for AMD Design to turn a profit, since the smaller company won't be buried under a mountain of R&D or fab-related debt. ATIC wasn't the only financial group pumping money into Sunnyvale—the Mubadala Development Company of Abu Dhabi paid AMD a further $125 million in exchange for 58 million shares and warrants in addition to the 35 million shares AMD had previously negotiated.

I don't claim to be a financial analyst, but this spinoff has to have made significant improvements to AMD's balance sheet. I'll leave it up to you whether said improvements constitute a corporate visit to the set of Extreme Makeover or the application of lipstick to a porcine proboscis. Any time a company can lift $1.1 billion off the "red" column and drop $825 million in the bank, it's a good day. AMD executives are flush with excitement (or doing a good job of faking it).

"With the close of this historic transaction, AMD and its committed partners have conceived two strong industry-leading companies capable of charting future courses that will dramatically improve the technology industry,” said Dirk Meyer, president and chief executive officer of AMD. "We are proud of our vision, the opportunities we are creating around the world, and fortunate to have astute, committed strategic partners in Mubadala and ATIC, and we are delighted to welcome Mubadala to the board of AMD. We are confident that this strategy and partnership will enable AMD to achieve long-term success based on designing and integrating industry-leading computing and graphics technologies that deliver compelling user experiences."

A wise man builds his house foundry on the rock

The Foundry Co begins life with an "enterprise value" of $4.3 billion—which isn't at all the same thing as saying that Foundry Co has $4.3 billion in the bank, or even that the company's fabs and cash on hand hit the mark. Of that $4.3 billion, AMD estimates that $1.8 billion of it comes from "AMD's contribution of manufacturing assets and liabilities, (including its fabrication facilities in Dresden), intellectual property and employees." $1.4 billion comes from ATIC, and the last $1.1 billion is the value of the debt Foundry Co assumed from AMD. The two companies will issue joint financial reports; stockholders are split 50/50 between AMD and ATIC.

After all the hustle and bustle, the truth is that not much is going to change in the short term. AMD Design will continue to work on its ultra-low-voltage multimedia notebooks, land OEM wins, and design microprocessors while the Foundry Co will keep on keepin' on when it comes to building Shanghai, Deneb, Barcelona, and the older Athlon X2 series. It will take some time for the two companies to significantly diverge; Foundry Co will scarcely be deploying 40nm process technology on bulk silicon next month.

The corporate executives we've spoken to at AMD have implied on several occassions that the new split would give both companies room to stretch and fund new projects and ideas that the single AMD previously couldn't due to its strangling amount of debt. The Foundry Co. will supposedly break ground in New York State by the end of this year and hopes to ramp its 32nm process by the middle of 2010.

That sort of talk makes sense in a bullish economy, sounds odd when bears are on the prowl, and is nearly flabbergasting when it comes from AMD. It would be easy, at this juncture, to lean back in my office chair and jaw about all the various times we've heard this sort of talk before, whether it was AMD, Intel, or another company altogether. It'd be easy—but it might not be smart. We've discussed AMD's need for a new approach and market plan for months. The deal to split the company into two halves was anything but spur-of-the-moment—it took about two years to hammer out the details—and it might be premature to conclude that AMD's talk of a resurgence is nothing but smoke.

Practically speaking, it better not be. As we saw in our recent Phenom II performance evaluation, clockspeed alone—even by the GHz—will not allow Deneb to reach Nehalem. Something else is necessary—hopefully it's on the drawing board.

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