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Technology Stocks : Intel Corporation (INTC)
INTC 45.51+10.7%Jan 9 9:30 AM EST
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To: Raymond Thomas who started this subject7/6/2001 4:17:32 PM
From: COMMON_SENSE  Read Replies (1) of 186894
 
Reality is that AMD earns $10-15 million this quarter

There are 343,946,000 AMD shares and each penny is worth 3.44 million dollars. If AMD earns $0.03 a share, it earns just over $10 million for the quarter. At $0.05 a share the take is about 16 million net profit before taxes.

AMD does around $1 billion this quarter in sales - so you can see there is about 11 mllion dollars a day passing through the AMD hands now. If you close the books one day early or count your inventory wrong, you can easily create $10 to $15 million in earnings for the quarter. This is the creative bookkeeping that we all know about.

Now,how does a firm build a $2 billion fab plant from scratch when it makes about $15 million a quarter in profits? The interest on this new loan would be at least 7% of the $2 billion construction cost or at least $140 million a year.

That $140 million is far more than AMD is going to earn this year if they continue on this path of low pricing and self-destruction. And I can assure you their bankers, like any lenders, are getting jittery about the poor return on capital. Possibly they will be downgraded in borrowing by Moody and pay more interest.

Who cares if you sell a jillion widgets if each widget is sold at cost. That is exactly where AMD is now.

And I predict that Intel will look a whole lot better on July 17th when they announce earnings than AMD.
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