Dan,
Regarding your numbers, you are pulling them out of the air.
I looked up Intel @ freeedgar.com, here is what I have:
Q101 Q201 Q301
Depreciation (total) 934 1984 3038
Deprecation/Q 934 1050 1054
PP&E 16774 17828 18138
Dep. (% of PP&E (n-1)) 6.25% 5.9%
When you state that Intel's costs will rise by $1B, I assume you mean that their Cost of Goods Sold will rise by $1B, correct?
If so, therefore, I take it that you believe Intel's depreciation costs will rise by $1B?
Those number do not jibe with the "historical" analysis I have presented since depreciation expense is ~ 5.9-6.25% of net PP&E....
Assume that Intel spends $8B on CAPEX in FY2002 and in Q4, around $1B, therefore, holding Depreciation expense constant @ 6.25% of PP&E(n-1)
Q401E Q102E Q202E Q302E Q402E
Deprecation 1134 1125 1180 1231 1279
Dep(total) 4172 1125 2306 3537 4816
PP&E(post Dep)17004 16879 17699 18468 19189
CAPEX 1000 2000 2000 2000 2000
PP&E(n) 18004 18879 19699 20468 21468
From my analysis, Depreciation expense YoY only increases by 644, or by 15% over last years levels. Now, one would need to analyze Intel's financials over a period of time, however my case is a "worst case" example.
With a annual depreciation expense increased by 644, how much added production capacity which will contribute to uP fabrication? Intel is upgrading to 300mm which should increase capacity (I don't have the exact number, help guys?)
Therefore, I find your analysis "flawed" that Intel will announce a GAAP loss. |
