Dave
re: correct Company B/AMD never had -40% GMs.
the example was meant for illustration only but you correct about amd's margin
re: As investors expecting GMs for company A to be 60+%? Are investors expecting GMs for company B to be 40%?
in the ideal world the value of the company depends on future (distributable) earnings expectations. In reality those expectations are replaced but short term outlook which would make gm important.
re: I disagree with point 6
I do not want to argue the point since it is almost impossible to get real cost info for any of the companies but some believe that they are lower ( at least on fab side)
re: you are assuming that company b can supply that delta in market share.
no but it is reasonable to assume that company b would go to greater length. If company a would loose market share it would have to sacrifice gm in order to get it back. There would be little difference in unit shipments and hence depreciation for company a one way or another. Company b, OTOH, would loose revenue plus considerable % of the units. And units are important for depreciation of the fixed cost.
re: History should teach us many lessons about the price war between AMD and Intel.
one important lesson that history teached us is that to be careful with the assumptions that are based on small data set.
re: Look at this ratio Total Debt/Equity.
that really does not matter much, no matter what financial books tell you. If company is starving for cash then
it is an important consideration but otherwise it is likely to be accurately priced in share price. We have no indications what-so-ever that amd is starving for credit
re: Additionally, remember, one cannot compete on price alone. This has been shown time and time again.
agreed and over the past few years amd showed that their rad map is at least as reliable as intel's. 3 years back road map execution was on the tongues of every analysts but it seems not an issue anymore
re: using a price war to take market share is essentially "cutting ones nose off to spite their face" and its very expensive.
it is not completely true, while price war is a loose-loose for intel since they own the market it is not the same for amd since their share used to be 5%. Simple illustration, when amd's share was 5% amd was loosing money on cpu business. Since became much more profitable for amd even though that the pricing structure did not improve much.
re: I personally believe that AMD is a "me too" type of company
it is really irrelevant but for the sake of the argument it seems that amd introduced 3d before mmx, reached 1GHz before intel, developed HT, support for ddr, etc
re: AMD must find ways to differentiate their product offerings from Intel.
that is how? Be getting out of processor market because otherwise their products are very different
re: If AMD continues being "bi-polar" in their corporate strategy, I, for one, do not forsee AMD being a viable company.
hey, you got into early 80's (before I went to college) topic of diversification. Company does not need to be diversified as long as investors are not mislead.
As far as viable, the 1st time I invested in amd was about 5 years back when amd went below $3-$4 split adjusted when analysts uniformly concluded that amd was not viable and likely to go under in less than a year
Regards
-Albert
ps it is nice to have a civil argument |
