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To: Charles R who wrote (87752)9/4/1999 4:05:00 PM
From: Fred Fahmy  Read Replies (2) of 186894
 
Charles,

Re: profit share

<I have no clue what this means....>

This is not surprising. I have found very few AMD investors who understand the difference between market share expressed in terms of volume, revenue, and profit.

Example:

There are two companies in the widget business, Craig's and Jerry's. Craig's company sells 100 widgets for $10 each. Craig's cost/widget is $1. Jerry's company sells 50 widgets for $2 each. Jerry's cost/widget is $2.

The total units for the industry are 150.

Craig's company has 67% volume share.

Total revenue for the industry is $1100.

Craig's company has 91% revenue share...a much higher share then the unit share because Craig's products have a higher ASP.

Total profit for the industry is $900.

Craig's company has 100% of the profit share because Jerry's company is selling product at cost (or worse <gg>).

The market share the AMD fans always love to talk about are expressed in terms of units.....this is by far the most meaningless expression of market share. Actually, it's almost completely meaningless. Anyone can increase volume share if they are willing to sell at a loss. This might make for some exciting headlines, but it is hardly a winning business strategy <gg>.....as AMD investors found out when AMD's retail market share jumped dramatically.

FF
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