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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 200.58-17.2%2:12 PM EST
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To: Petz who wrote (615)7/13/2000 1:19:13 AM
From: PetzRead Replies (2) of 275872
 
Is it possible to figure AMD's earnings by the fact that AMD or a brokerage (not sure which) said that AMD will definitely be taxed at least a little this quarter?

From the 1998 annual report, 1998, 1997 and 1996 had the following "benefit for income taxes":
(91,878) (55,155) (85,008)

1999 had payments for income taxes of $167M (there was a big capital gain in Q3) according to the 1999 annual report.

So there should be tax credits of just $65M left as of 1/1/2000. Q1 should have used that remaining credit all up with its big profit. So why did AMD originally say that their earnings in 2000 would be totally untaxed?

Maybe the capital gain in 1999 did not really eat up any of the tax credits?

That would mean there's $232M remaining credits as of 1/1/2000. At 31% rate forecast by AMD for 2001, the $189.3M profit of Q1 would eat up $59M leaving $173M of credits. It would require a profit of $558M to eat up all the remaining credits. Thats out of line totally.

So maybe the truth is somewhere inbetween. Perhaps capital gains eat up tax credits at a different rate than operating earnings.

Any accountants here know the answer to this riddle?

All I can say is that if AMD was assuming that 3 full quarters of earnings would hardly require any tax payments, and then changed their mind so that one quarter of earnings requires paying taxes, either some accountant really goofed or AMD has fantastic earnings this quarter.

Petz
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