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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 200.46-17.2%Feb 4 3:59 PM EST
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To: Petz who wrote (653)7/13/2000 11:07:52 AM
From: PetzRead Replies (1) of 275872
 
First, DO NOT ATTACH ANY CREDENCE TO THE 1.5B REVENUE RUMOR. The devil is in the details and the details say that the news was fabricated.

Second, in the prior post, I discussed how much profit it would take to eat-up all of AMD's remaining tax credits. I came to the conclusion that capital gains might not eat up the tax credits as quickly as operating earnings, and now I came up with a reason this might be true. [HINT: We really need a corporate accountant on this thread to check out my reasoning!! Does anyone know anyone???]

When AMD bought Nexgen they paid far above "book value" for it. It may be that the excess amount is treated for accounting purposes as if it was a capital loss -- the only difference from a "normal" capital loss is that its subtracted from net income over a long period of time and this process is refered to as "amortization of good will."

I'm wondering whether the accounting laws allow AMD to take a capital gains and allow part of it to eliminate this "amortization of good will" -- which will increase future taxes by increasing reported profits -- rather than by directly paying taxes on the capital gain?

Who cares? If someone could figure out what percentage of AMD's Vantis capital gain actually ate up their tax credits, they could come up with a minimum profit projection for this quarter, based on the fact that AMD will be paying taxes.

Petz
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