AMD 2011 Annual Report Download - page 28

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satisfactory terms. The health of the credit markets may adversely impact our ability to obtain financing when
needed. In addition, any downgrades from credit rating agencies such as Moody’s or Standard & Poor’s may
adversely impact our ability to obtain external financing or the terms of such financing. Credit agency
downgrades may also impact relationships with our suppliers, who may limit our credit lines. Our inability to
obtain needed financing or to generate sufficient cash from operations may require us to abandon projects or
curtail planned investments in research and development or other strategic initiatives. If we curtail planned
investments in research and development or abandon projects, our products may fail to remain competitive and
our business would be materially adversely affected.
The markets in which our products are sold are highly competitive.
The markets in which our products are sold are very competitive, and delivering the latest and best products
to market on a timely basis is critical to achieving revenue growth. We believe that the main factors that
determine our product competitiveness are timely product introductions, product quality, power consumption
(including battery life), reliability, selling price, speed, size (or form factor), cost, adherence to industry standards
(and the creation of open industry standards), software and hardware compatibility and stability and brand
awareness.
We expect that competition will continue to be intense due to rapid technological changes, frequent product
introductions by our competitors of products that provide better performance or include additional features that
render our products uncompetitive and aggressive pricing by competitors, especially during challenging
economic times. For example, ARM-based processors are used in mobile and embedded electronics products as
relatively low cost and small microprocessors and also in form factors such as tablets and smartphones. To the
extent consumers adopt new form factors and have different requirements than those consumers in the PC
market, it could negatively impact PC sales, which could negatively impact our business. Also, Intel announced
plans to implement 3-D tri-gate transistor architecture on 22nm process technology, which, Intel expects, can
improve power consumption and performance of its products. Using a more advanced process technology can
contribute to lower product manufacturing costs and improve a product’s performance and power efficiency. If
competitors introduce competitive new products into the market before us, our business could be adversely
affected. Some competitors may have greater access or rights to companion technologies, including interface,
processor and memory technical information. Competitive pressures could adversely impact the demand for our
products, which could harm our business.
We have a substantial amount of indebtedness which could adversely affect our financial position and prevent
us from implementing our strategy or fulfilling our contractual obligations.
Our debt and capital lease obligations as of December 31, 2011 were $2.0 billion, which reflects the debt
discount adjustment on our 6.00% Convertible Senior Notes due 2015 (6.00% Notes) and 8.125% Senior Notes
due 2017 (8.125% Notes).
Our substantial indebtedness may:
• make it difficult for us to satisfy our financial obligations, including making scheduled principal and
interest payments;
• limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions and
general corporate and other purposes;
• limit our ability to use our cash flow or obtain additional financing for future working capital, capital
expenditures, acquisitions or other general corporate purposes;
• require us to use a substantial portion of our cash flow from operations to make debt service payments;
• place us at a competitive disadvantage compared to our less leveraged competitors; and
• increase our vulnerability to the impact of adverse economic and industry conditions.
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