Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 228.68

+1.2%

Nov 17 3:59 PM EST

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To: herenow_2 who wrote (54415)	10/23/2001 11:25:30 PM
From: Zeev Hed	Read Replies (1) of 70976

Herenoq, I don't understand the "Street" point of view that INTC will saddle itself with "enormous fixed cost" (Ragsdale astutely* points out that Intel will be setting itself up for an enormous amount of fixed costs)*. Not very astute at all. First, if INTC does spend $6 B next year in CAPEX, it will be less than their ongoing depreciation charges per year ($6.6 B currently), thus, in principle, even with that addition, cost will go down by a net of about $500 MM (once capital assets are depreciated, they no longer hit the COGS line). One can make an argument that INTC should spend at least at the rate of depreciation charges, without impacting its cost structure. Zeev

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