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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 221.06-1.1%3:59 PM EST
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To: herb will who wrote (48740)7/23/2001 11:07:14 AM
From: Dan3Read Replies (2) of 275872
 
Re: I fail to understand, as usual

The point to remember is that this isn't necessarily intentional on Intel's part. As you've pointed out, depreciation follows a set of rules.

But, the bottom line is that AMD has been able to use its plant for a much longer period than Intel, especially recently. And that leads to their accounts being a better reflection of their actual business than Intel's are or theirs.

Every Indication is that Intel is performing a full refresh of about half its total capacity over about 18 months. Which means they should be expensing a much greater portion of their capacity than they are.

But even if they'd like to do so, GAAP rules and the IRS would make it tough for them to do so. Besides, I doubt they want to report big losses, anyway.

Nevertheless, the net result is that, like it or not, Intel has been reporting higher than real earnings throughout this period.

Try and understand how NT could get into a position where they had to report a $19 Billion loss for one quarter and you'll begin to understand that accounting is as more of a subjective art than a simple "accounting" of sales and costs.

I don't mean to imply that Intel should be reporting an extra $19 Billion in costs per quarter, but they probably should be reporting $0.5 to $1 Billion more in costs per quarter than they do - at least for the period that they're junking all that capacity.
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