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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 237.57-2.6%3:59 PM EST
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To: wbmw who wrote (241469)9/29/2007 10:07:26 PM
From: graphicsguruRead Replies (2) of 275872
 
wbmw: With due respect, *UTTER HOGWASH*. I value your posts in
general, but in this case, you're dead wrong.

Let's take a hypothetical scenario. AMD continues to lose money at
the rate of $.5 billion/Q for a few quarters. They find themselves in
default of the Dresden loan covenants. They can't do anything.
Dresden banks reposess Fab 36/38 and sell it to TSMC. Game over.
Now Intel has a complete monopoly.

Intel raises prices by $50 per chip across the product line, and
doesn't change the distribution of skus. If they sell a similar
volume, their profit goes up by something like 50 milliion units times
$50 which is $2.5 billion/ Q

Do you want me to believe that demand for P.C.'s suddenly falls
off a cliff because of the $50 hike? That a 10% increase in
the price of a $500 computer will cause demand to fall off by more
than AMD's production?

Why if that were true, we'd see currency fluctuations causing massive
changes in PC demand. But guess what? They don't.

I'm well aware of the meaning of price elasticity. But you're attributing
an outrageous elasticity to this market with absolutely no justification.

Let me ask you: do you have a position in AMD or Intel? Because
if you really believe what you've written, it would be hard to justify
investing in Intel.
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