February 10, 2009, 2:51 PM — Advanced Micro Devices has been forced to give its shareholders an extra week to vote on its plan to spin off its manufacturing operations, after too few shares were voted at its stockholder meeting Tuesday morning.
AMD said 97 percent of the shares voted were cast in favor of the spin-off, but that the shares voted represented only 42 percent of its total stock. To reach a quorum, a majority of AMD's outstanding shares needed to be voted.
The company has adjourned the meeting until Feb. 18 to give more shareholders time to vote.
Asked about the low turnout, AMD said it moved too quickly to close the deal and didn't give shareholders enough time to vote.
"In essence, we pursued too aggressive a timeline for the vote," spokesman Michael Silverman said via e-mail. "All parties remain fully committed to closing the transaction, and pending the stockholder vote, expect to close the transaction in the next few weeks."
At least one financial analyst seemed to agree with the explanation. "I just think the timetable on the proxy to vote was too tight," said Doug Freedman, managing director of research at Broadpoint AmTech.
AMD was punished for the delay by the stock market. Its shares were trading 8 percent lower in afternoon trading Tuesday, at US$2.19.
The company has been struggling financially for several quarters and the deal is intended to turn around its fortunes, by offloading its costly manufacturing operations and the significant debt it has accumulated there.
The company is essentially breaking itself into two parts. The part called AMD will continue to design and market its semiconductor chips, while the other part, called The Foundry Company, will own and operate its manufacturing plants in the U.S. and Germany.
The Foundry Company will be majority-owned by two investment companies owned by the government of Abu Dhabi. AMD will own 34.2 percent of the spin-off, down from the 44.4 percent that it was originally supposed to own. Its share of the company declined because the value of its stock declined.
AMD has cleared the main regulatory hurdles to the deal, and the shareholder vote is its last major obstacle. The company expects to close the deal within a few days of getting shareholder approval, AMD executives have said.