When you rush legislation through Washington, like Congress did with the two financial sector bailout bills, you lose the right to complain when the outcome blows up in your face
That means you Senator Chris Dodd, who actually inserted the language in the $170 billion AIG bailout bill guaranteeing the company’s right to pay bonuses promised before February 11, 2009. And come on down, Sen. Chuck Schumer, who wants to tax 100% of the AIG bonuses, without a legal leg to stand on. And President Obama - we love ya and we’re in your corner – but rushing legislation along only increases and compounds the likelihood of a rookie mistake.
So, the $164 million paid out in bonuses by AIG to 73 of its employees – 11 of whom took the bonus money and immediately quit the company – is on the front pages of every business web site in the U.S., if not the world.
Good luck getting the taxpayer’s money back. And good luck, Congress, in getting your reputation back, if that were ever possible.
In the tech sector today, Advanced Micro Devices is making news, with a security filing today stating that Intel has threatened its ability to make x86 chips, which includes AMD’s PC and server CPUs. Not many people know this, even on Wall Street, but AMD licenses the right to the x86 architecture from Intel under a cross licensing agreement. Right now, that agreement is in jeopardy, from AMD’s point of view.
The bone of contention could be in AMD’s desire to spin off some of its chip making responsibility to off-shore vendors, which could violate the spirit, if not the letter of the law, of the Intel agreement. In it, according to insiders, Intel has a provision that AMD can use its technology only if it makes the chips in its own plants. Farming the work out, as anyone who ever signed a non-disclosure agreement, opens a new can of worms that Intel’s lawyers don’t like.
But AMD has already inked a pact with Global Foundries to make some of its chips – signing the deal on March 2. AMD has already told analysts that the x86 chip agreement with Intel wasn’t put into peril because of the Global Foundries deal, but who’s to say? Certainly, Intel doesn’t see it that way.
In its security filing today, AMD says that Intel “… alleges that the Company [AMD] has committed a material breach of the Cross License through the creation of the Company’s GLOBALFOUNDRIES joint venture and (ii)Â purports to terminate the Company’s rights and licenses under the Cross License in 60 days if the alleged breach has not been corrected.”
This one is probably headed to court; with both sides claiming the other is in violation of the original x86 cross-production deal. To check out the AMD security filing for yourself, visit: http://secfilings.nyse.com/filing.php?doc=1&attach=ON&ipage=6205688&rid=12.
It’s too bad for AMD. The company has seen its stock rise 40% since the Global Foundries deal was signed. On the surface, the spin-off seemed like a winner. Analyst Doug Freedman of Broadpoint.AmTech told CBS Marketwatch that a big factor is the huge cash infusion AMD gets from the deal, including $700 million from Abu Dhabi-based ATIC (the financier and co-creator, along with AMD of Global Foundries) for its ownership interests in the new company. Global Foundries also assumed responsibility for about $1.1 billion of associated AMD debt.
Let’s see how it plays out in court. Either the Intel mow-mowing legitimizes AMD as a real competitor, or the cross-licensing deal goes under – then all bets are off.