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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 253.73+1.6%3:59 PM EST
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To: cruzbay who wrote (165017)7/13/2005 4:33:05 PM
From: economaniackRead Replies (2) of 275872
 
We are talking about potential additional CPG revenues during the period from 2000-2005. They almost all fall to the bottom line.

Just some rough numbers. AMD's processor ASP has been in the $60-$70 range during that period on roughly 8 million chips per quarter. Figure incremental production costs at about $30 per processor (silicon, packaging and testing). They probably had average capacity in the 10-12 million per quarter range and could argue that under fair competition they would have had ASPs close to $100. That would roughly double CPG revenue from 500 million to over a billion a quarter, but costs would only be $100-120 million higher. 80 percent flows to the bottom line.

I expect that AMD can make a pretty convincing case that absent the kind of armtwisting that dropped some OEMs from 40% AMD to 0 overnight their sales would have been limited by their production capacity. THe big question for me is what the actual capacity was over the past 5 years. It may well be that they sold most everything they could make, just at huge discounts because they couldn't place it with tier 1 oems. That would limit the potential claims a lot. On the other hand if what appeared to us as slow ramps were really dictated by marketing issues, and they can show that Intel illegally excluded them from those markets they are gonna ask for a lot of money.
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