Re: assume a 5 year life of the 7.5B Capex...
Dave, if they're investing $7.5 Billion per year, particularly when revenues aren't growing, they need to be depreciating $7.5 Billion per year. If you want to use a 5 year perspective, then you have to assume that a fifth of somewhere between current ($17 Billion) and $37.5 Billion (5 times current expenditures) worth of plant and equipment must be depreciated each year.
What I find significant is that not-yet-depreciated plant and equipment, which will sooner or later have to be expensed, is growing very fast at Intel, while it is barely growing at AMD (AMD is depreciating old plant as fast as they are adding new plant - as they replace old plant with new more quickly, they increase their depreciation rate). Meanwhile, AMD is gaining market share, while Intel loses it. Q1 2000 Q1 2001 Pct. Change
Intel Mkt. Cap. $206.26 Billion
Depreciation 897 934 4.12
Revenue 7,993 6,677 -16.46
Property, plant and equipment 28,253 30,774 8.92
Less accumulated depreciation 13,240 14,000 5.74
undepreciated PP&E 15,013 16,774 11.73
AMD Mkt. Cap. $9.83 Billion
Depreciation 128 153 19.53
Revenue 1,092 1,188 8.79
Property, plant and equipment 5,462 5,621 2.91
Less accumulated depreciation 2,825 2,957 4.67
undepreciated PP&E 2,636 2,664 1.06
Eventually, the piper will have to be paid.
Dan |
