Advanced Micro Devices Inc. (NYSE: AMD) has been struggling with $5 billion in debt, operating losses and frightening competition from larger rival Intel (NASDAQ: INTC). For the last year, it has looked like the company might not stay independent.

Now, it has fashioned it own rescue package and it appears that it will work, perhaps extraordinarily well.

AMD will spin off its capital intensive manufacturing operation and become a chip design operation. According to the FT, "AMD plans to create a new enterprise, initially called The Foundry Company, with Abu Dhabi's Advanced Technology Investment Company (ATIC)." The new venture would have capital to expand it plants

ATIC would make new investments in the operation of as much as $6 billion and part of AMD's huge debt would be passed off to the new entity

Former AMD CEO Hector Ruiz, who nearly ruined his company, will get to be chairman of The Foundry Company. It is hard to imagine how he talked AMD and Abu Dhabi investment executives into that. His incompetence has been almost without boundaries.

AMD's investors, who have been crushed by management's actions for over two years can ask a very good question. "What took so long?" AMD has been talking about getting out of the manufacturing business for over two years. In early 2006, AMD traded near $40. Now it is just above $4.

It was an ugly show and shareholders have had a front row seat.

Douglas A. McIntyre is an editor at 247wallst.com.

Minyanville Professor Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.

The Brocade Communications (NASDAQ: BRCD) deal is interesting for a couple reasons. First of all -- hey it's a deal. So yes, deals can still get done, even in this market.

Second, and more importantly, BRCD is paying $3 billion or almost exactly three times the cash and investments on Foundry Networks' (NASDAQ: FDRY) books. So in essence, 1/3 of the deal price is being funded by the liquidity of Foundry Networks balance sheet. Looking at the technology landscape, there are a whole bunch of companies that look like FDRY from a balance sheet perspective.

Also, this deal highlights the fact that even in a market full of angst, companies do look forward to see what business trends they want to exploit. My take is BRCD is seeing it wants a bigger part of the bandwidth pie going forward and the two companies may have complementary technology to help extend their current reach.

Foundry Networks, Inc. (NASDAQ: FDRY), which builds networking technologies, went public in 1999. With the Internet surge, the stock price went over $200.

Of course, that was a temporary thing. Since then, Foundry's shareholders have suffered.

However, this week they got some cheery news. Foundry agreed to sell out to Brocade (NASDAQ: BRCD). The deal comes to about $2.91 billion in a combination of cash and stock.

Essentially, the deal blends some key technologies. While Brocade has a strong footprint in fiber channel systems, Foundry is a top player in switches and 10-gigabit Ethernet offerings.

If anything, it's a necessary step to deal with the intensely competitive environment, especially against the mighty Cisco (NASDAQ: CSCO).

No doubt, Brocade has demonstrated success with M&A, such as with its acquisition of McData. However, networking deals can be tricky. After all, Brocade operates primarily on an OEM basis whereas Foundry has a large direct sales force.

There is some financial risk too as Brocade needs to borrow about $1.4 billion.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

MOST NOTEWORTHY: Cavium Networks Inc (NASDAQ: CAVM), Travel Centers of America LLC (AMEX: TA) and MetroPCS Communications Inc (NYSE: PCS) were today's noteworthy initiations:

• Cavium Networks was initiated with a Strong Buy rating and $25 target at JMP Securities. The firm's checks indicate significant momentum for Cavium's products and cites good visibility. Cavium was also initiated with a Market Weight rating at Thomas Weisel, which finds shares fairly-valued at current levels, with a Buy rating and $25 target at Needham, with an Equal Weight rating and $22 target at Lehman Brothers, with an Equal Weight rating at Morgan Stanley and with a Buy rating and $26 target at Deutsche Bank, which expects over 50% revenue growth from 2006-2009 due to the growth in the company's network processor product line.
• TravelCenters of America was initiated with a Buy rating and $54 target at Ferris Baker Watts and with a Buy rating and $70 target at BWS Financial, as the firm is positive on TA's earnings power and valuation.
• Citigroup initiated shares of MetroPCS with a Buy rating and $40 target. The firm believes the company's coupled with deepening penetration in its core markets should produce revenue and FCF growth that exceeds the maturing industry average.

OTHER INITIATIONS:

• IntercontinentalExchange Inc (NYSE: ICE) was initiated with an Outperform rating at Credit Suisse.
• Janco initiated shares of Foundry Networks Inc (NASDAQ: FDRY) with a Buy rating and $19.50 target, as the firm believes the company's new products put it in a position to gain market share.
• CIBC World Markets initiated shares of Accuray Incorporated (NASDAQ: ARAY) with a Sector Underperformer rating and $19 target.

Last week, BloggingStocks writer Eric Buscemi brought us the news that Texas Instruments (NYSE: TXN) intends to spend $1 billion to expand chip assembly and test operations in the Philippines. Analysts are almost unanimously positive on TI performance and now there's one more bit of positive news. SDA Asia Magazine has reported that Larry Tan has been named President of TI's operations in Asia. In light of Tan's 28 year history with TI, from manufacturing on through marketing, Tan is a perfect fit with the new depth of focus that TI has undertaken in its manufacturing flow.

Earlier this year, Texas Instruments adopted a new manufacturing strategy which more closely aligns the expressed needs of their customers with the R&D of TI's third party suppliers. This gives TI a deeper layer of product development and manufacturing control. This strategic shift should give greater quality assurance capabilities to TI and should also speed the processes of product design and development. Texas Instruments now looks at the R&D efforts of its supplier foundries as the first step in its own manufacturing process.

Texas Instruments forecasts that it will spend about $2.3 billion on research and development in 2007. Areas of primary focus shall include: reduced power consumption, reduced costs for digital mobile hardware, reduced size for SRAM memory requirements and analog chip technology. By working more closely with the R&D departments of its third party suppliers to accomplish projects already in process, Texas Instruments will have greater availability of its own resources to apply to new and upcoming technological developments.

MOST NOTEWORTHY: Delta Airlines (DAL), Monster Worldwide, Inc (MNST) and CNet Networks, Inc (CNET) were today's notable initiations:

• Prudential started Delta Airlines (NYSE: DAL) with an Underweight rating and $14 target citing valuation.

• Credit Suisse assumed coverage of Monster Worldwide (NASDAQ: MNST) with an Outperform rating and $60 target. The firm believes Monster is well-positioned to benefit from the growing shift of recruitment industry dollars to online, international expansion, and improving labor market trends.

• CNet Networks (NASDAQ: CNET) was started with a Buy rating and $11 target at Banc of America, believing the company is well-positioned to benefit from strong secular online advertising growth due to its leading online brands.

OTHER INITIATIONS:

• AG Edwards initiated shares of Dendreon Corp (NASDAQ: DNDN) with a Hold rating.

• Citigroup started GSC Investment Corp (NYSE: GNV) with a Hold rating and $16 target while Wachovia started shares with an Outperform rating. JP Morgan started shares of GSC Investment with a Neutral rating.

• Kaufman started J2 Global Communications (NASDAQ: JCOM) with a Buy rating and $35 target.

• Cowen assumed coverage of Foundry Networks, Inc (NASDAQ: FDRY) with a Neutral rating.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Some of today's most notable upgrades include SanDisk Corp (SNDK), CVS Corp (CVS), Dow Jones & Co (DJ) and DaVita Inc (DVA):

• SanDisk Corp (NASDAQ: SNDK) was upgraded to Buy from Neutral at UBS with a $53 target, as they believe Apple's (AAPL) new 16GB & 32GB iPod Video products will be NAND flash based. The firm expects SanDisk shares to perform as Apple's products ramp.

• Deutsche Bank upgraded shares of CVS Corp (NYSE: CVS) to Buy from Hold with a $42 target as they believe the bidding process for Caremark Rx, Inc (NYSE: CMX) is over, reducing concerns.

• Prudential upgraded shares of Dow Jones & Co (NYSE: DJ) to Neutral from Underweight to reflect valuation and the company's strong 2007 outlook.

• Piper Jaffray upgraded DaVita Inc (NYSE: DVA) to Outperform from Market Perform with a $59 target on valuation.

OTHER UPGRADES:

• Citigroup upgraded Adolor Corp (NASDAQ: ADLR) to Hold from Sell with a $10 target to reflect GlaxoSmithKline's (NYSE: GSK) plans for an additional advanced study of Entereg.

• Wachovia upgraded shares of Symmetry Medical Inc (NYSE: SMA) based on analysis that shows inventory levels have fallen at large-cap orthopedics firms while capital expenditures have stabilized, competitors are more upbeat on market outlook, and checks that indicate the supplier market has stabilized.

• Foundry Networks, Inc (NASDAQ: FDRY) was upgraded to Buy from Neutral at Bank of America.

• JP Morgan upgraded Alaska Communications Systems Group (NASDAQ: ALSK) to Outperform from Neutral on valuation.

• Goldman Sachs upgraded PPG Industries (NYSE: PPG) to Buy from Neutral with an $82 target.

• Merrill Lynch upgraded shares of Expedia, Inc (NASDAQ: EXPE) to Buy from Neutral with a $27 target.

• Matrix USA upgraded AMR Corp (NYSE: AMR) to Hold from Sell on valuation.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).