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UAE Company Takes 8.1% Stake in AMD

AMD is welcoming some new investors based in Abu Dhabi who are sinking $622 million into the chipmaker.

It all amounts to about an 8.1 percent stake in the Sunnyvale, Calif.-based AMD by Mubadala Development Company, a strategic investment and development company headquartered in Abu Dhabi, the capital of the United Arab Emirates (UAE). The company received 49 million newly issued shares at a price per share of $12.70, the closing price of AMD on Thursday.

AMD said it received about $608 million after reimbursing Mubadala for approximately $14.6 million in expenses. The company plans to use the cash from the stock sale "for general corporate purposes including accelerating its long-term, customer-focused growth strategy by investing in R&D, product innovations and manufacturing excellence."

AMD has been struggling to stay profitable, despite market share gains against its rival Intel. In the third quarter, for example, AMD reported revenues of $1.63 billion, a 23 percent increase from the same quarter in 2006 and an 18 percent improvement from the second quarter.

But expenses due to manufacturing transitions and the ongoing cost of its ATI acquisition ate into the bottom line, resulting in an operating loss of $226 million, and a net loss of $396 million, or 71 cents a share.

In a statement, AMD Chairman and CEO Hector Ruiz said AMD proudly welcomes Mubadala to the AMD shareholder family. "This investment strengthens AMD's ability to deliver customer-centric innovation and choice to the marketplace, creating greater value for all of our shareholders."

Mubadala CEO and Managing Director Khaldoon Khalifa Al Mubarak said, "AMD is a great fit for Mubadala's investment approach - a spirited competitor and innovator led by a strong and visionary management team. We see significant opportunities for long-term growth and value creation."

AMD stressed that the investment wouldn't give the company any sort of majority or representation on the board of directors, which means the transaction does not present a controlling investment or acquisition subject to review by the Committee on Foreign Investment in the U.S. (CFIUS).

Shares of AMD were $12.69, off by a penny in early trading action Friday after the announcement.