"Anyone see anything bad?
What really stands out for me is that INTC's net PP&E is a whopping $16.32B compared to AMD's $4.3B and yet AMD is going to have 100M unit/annum capacity when Fab 36 comes on stream to compete in the 180M unit market, of which AMD's current capacity is approx. 35M units/annum.
That's right, once Fab 36 comes on stream AMD's $4.3B PP&E will have capacity to provide 50% of the market's annual unit consumption.
Raises the question: In a relative sense, aren't INTC's fabs about $12B overvalued in their financials? (If so, perhaps that may explain how INTC can manufacture stable earnings over time.)
Additionally, INTC is sitting with $3.7B in Goodwill (is that the JFTC goodwill? :)on its balance sheet vs. AMD's Goodwill of $0.
Summing up then, AMD will be able to supply 50% of the market with superior product when Fab 36 comes on stream for around $5B.
Currently INTC requires a whopping PP&E of $16.32B to supply 80% of the CPG market and supply its chipsets. Drop out $1.3B for chipsets, leaving $15B PP&E to supply its 80% of the CPG market.
Pro-rating, that's implies about $10B of INTC PP&E to supply 50% of the CPG market, or about twice the cost/unit as AMD.
Imagine if these seemingly overinflated PP&E INTC assets had to be written down, not to mention the $3.7B goodwill.
Dunno, about you guys, but on a comparative basis I'd say INTC's PP&E assets are overstated by $5B and the (JFTC?) Goodwill by $3.7B.
In total, from an AMD comparative viewpoint, INTC is currently showing assets overstated by $8B to $10B. That $9B in unexpensed asset, then, represents an awful lot of overstated profit over the past few quarters. Nice that it's legal though. |
