John F, I'm glad you responded to my original analysis of which company AMD or Intel would be hurt more by price cuts.
Projecting Intel semiconductor cost from their total operating margins is deceptive.
I was wrong, but not deceptive, if we assume that Intel's expenses between CPG and "Other" are done accurately. But, as I pointed out in my other post, this does not affect my conclusion at all, it, in fact, reinforces the conclusion. The only thing incorrect is the "cost per microprocessor" calculation. Intel's cost per microprocessor is less than I calculated, but at 27M in unit sales last quarter, $37 of each CPU's sales price is needed to subsidize the "Intel Other" group.
Additionally, SG&A of 17% isn't huge, it's probably a little above normal.
Well, its growing because of sales incentives, Rambus rebates, Intel Inside and the like and, I would bet 90% of marketing expense is CPU related. But the biggest albatross around Intel's neck is not MG&A -- on that you are very correct -- it is the huge losses at "Other" that have to be subsidized by CPU sales.
The folks on this thread need to rigorously question each others assumptions
Thank you for doing that. Now the proof of Intel's greater vulnerability to a 15% price cut is even more obvious.
Petz |
