John, re:<In your calculations, you fail to mention that Intel's "other" businesses had a loss of over $1Billion, and that the operating profit from IAG was 32.8% (sales 5.133B - operating profit 1,683B).>
LOL, you don't read the fine print, do you? The "Other" group includes CORPORATE, i.e., company-wide operating expenses as part of its expense structure. In any event, Intel Corporate needs $1B in profits from CPU's just to break even. I don't really care if Intel CPG is profitable -- if the corporation is losing a $Billion a year.
In fact, by ignoring the non CPU businesses of both companies I favored Intel.
Here's what happens to Intel with a 15% CPG revenue decline due to an ASP decline: CPG revenue becomes $4,363, operating profit becomes $913M. Unfortunately, "ALL OTHER" still has a loss of $1,041, so Intel has an OPERATING LOSS of $128M.
With AMD, the equivalent of the CPG group is the "PC Processors Products" plus about 2/3 of the "Other IC Products" group, because that group has the chipset revenue. A 15% ASP decline would reduce revenues by 0.15*(661M+50M), or by $106.6M. AMD would still have an OPERATING PROFIT of 167M - 106.6M, or $60M.
As for results from the non-CPU businesses, I think Intel is in even worse shape than AMD, with much more exposure to the Comm business.
Intel is playing a fool's game with these price cuts. They are going to weaken themselves more than they weaken AMD.
Petz |
