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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 231.83+1.7%Jan 16 9:30 AM EST
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To: Petz who wrote (79116)5/2/2002 5:09:55 PM
From: Saturn VRead Replies (2) of 275872
 
Revenue per Employee is an absurd metric.

For example trading companies and department stores have enormous revenue per employee, but can consistently lose money and go bankrupt.

Consider the following thought experiment: AMD can sell the Dresden Fab to UMC, and pay a higher price for wafers to UMC ( since UMC will not have world class yields like AMD, and it will also have to make a profit). Total Revenue for AMD is unchanged, but The Fab employees are now not employed by AMD, and Revenue per Employee goes up. Continue the process. Sell the Assembly and Test Plants also, and contract out the assembly and test work. The Revenue per Employee skyrockets, but AMD's competitive situation is probably worse.

Having Fujitsu manufacture Flash wafers has given AMD a higher Revenue per Employee than otherwise. Dropping the Pentium II cartridge and off chip L2 cache, in favor of the Celeron Chip, lowered Intel's Revenue per Employee, but strengthened its competitive position.

The correct metrics in any business are Profits, and Return on Shareholder equity.

And by the way when you accounted for AMD's profits, you forgot to account for the NextGen acquision cost of half a billion dollars.
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