FORTUNE -- Earlier today, Reuters reported that chipmaker Advanced Micro Devices (AMD) "has hired JPMorgan Chase & Co. (JPM) to explore options, which could include a potential sale." AMD stock closed 5% higher on the news, but likely will fall in the aftermarket after an AMD spokesperson told Bloomberg that it is not considering a sale of the entire company (just various pieces, possibly).
While waiting for the financial wires to sort this all out, I reached out to a couple of private equity executives with experience in the semiconductor space. And they both told me that AMD would be a very, very difficult company for private equity to acquire. Or, as one said, AMD puts him in a "cold sweat."
AMD already has more than $2 billion of debt on its balance sheet, which is a large load for a company whose equity market cap is just $1.49 billion. On top of that it has significant earnings volatility (not a positive in PE firms' eyes) and, most importantly, it has negative EBITDA.
"What are you going to leverage?" asks one of the PE investors. "Maybe I could see a sovereign wealth fund doing the deal on an all-equity basis. But no way this is a leveraged buyout."
Sign up for Dan's daily email newsletter on deals and deal-makers: GetTermSheet.com
|2 million students missing out on college aid|
|GM raising Corvette prices|
|China to fight pollution with drones|
|Boeing reports wing cracks on Dreamliners|
|Everything must go: There's a flood of store closings|