Re: Back to the barn, for AMD.
In Q1 of this year, INTC Current Assets - Current Liabilities was -$1,148 Million.
In Q1 of this year, AMD Current Assets - Current Liabilities was +285 Million.
In Q1, AMD was still suffering from trying to compete with much higher infrastructure cost than Intel's. Large volumes of integrated chips for Socket A appeared only at the end of the quarter.
Now Intel has much higher infrastructure costs than AMD, thanks to the dual channel motherboards and Rambus required by P4.
With the exception of a limited number of server chips, Intel's chips sold for approx. $150 to $750 last quarter - going forward, most will sell for $75 to $350, even as the costs of producing many of Intel's chips is more than doubling. AMD's selling prices are moving from a general range of $45 to $325 last quarter to $65 to $200 this quarter, and AMD's costs are not going up.
AMD has been gaining market share, while Intel has been losing market share. Intel has been enjoying monopoly profits in the SMP and mobile segments. Going forward, those profits are being slashed by the threat of AMD's entry, even if the threat has so far been an empty one.
AMD's cash flow needs last quarter were just over $1 Billion, while Intel's cash flow needs were just over $6 Billion. AMD's non-CPU business makes money while Intel's non-CPU business loses more than $1 Billion per quarter.
Being the high cost producer, with many money losing divisions, is not good when you are in a vicious price war with a low cost producer, who's "other" divisions are profitable.
INTC's undepreciated (not yet expensed) assets were up by $1,700 Million this quarter, while AMD's rose by less than $30 Million. Consider the actual value of the plant & equipment at the two companies. Look at what it's doing for each company in terms of changes in revenue and earnings in that period. Is Intel really that much better off while AMD is unchanged? At the rate things are going, 2 years from now INTC will begin piling on debt while its books list assets worth $5 Billion as being worth $20 Billion.
I agree with you that this price war is sending AMD back to the barn, but what you failed to notice is that it has dumped Intel into the cesspool.
Dan |
