Ali,
I was responding to this from John:
"Now, Intel had an ASP of about $180 in Q1, and their operating profit was only 9.6% of their sales. [Question: If Intel supposedly has higher gross margins than AMD, how come their operating profit is a smaller percentage of sales? One reason is Intel's HUGE marketing, general and administrative expense equal to 17.3% of sales, while AMD only has MG&A of 12.6%.] Therefore, their average production cost per microprocessor is $162.72."
Projecting Intel semiconductor cost from their total operating margins is deceptive. That 1$B loss from other businesses has an impact on their 32% operating margin from IAG. So the arguments that follow don't hold water. The Intel/AMD price war affects microprocessor margins, it doesn't affect "other business" margins.
Additionally, SG&A of 17% isn't huge, it's probably a little above normal.
The folks on this thread need to rigorously question each others assumptions, They could lead AMD investors to some wrong conclusions, a potential problem with any moderated (censored) thread.
After all, the only point is to make money, regardless of which company you are invested in.
John |
