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Technology Stocks : AMD:News, Press Releases and Information Only!
AMD 213.50+6.2%3:59 PM EST
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To: Francis Chow who wrote (5239)3/24/1998 8:40:00 PM
From: Adrian Wu  Read Replies (1) of 6843
 
Francis,

THe cost of goods sold is usually calculated at when the goods were made. In the case of inventory, the company can either use a First in-First out (FIFO) or Last in-first out (LIFO) principle. However, as we all know, K6 finished goods inventory is virtually non-existent as they are all on allocation, and fly out of the door as soon as they are made. It takes probably a month or more from raw wafer to a packaged microprocessor, especially with all that testing and the many mask steps that it takes to make a complicated chip like the K6. Since AMD only started producing 0.25 micron K6s at Fab25 recently in any significant volume, the cost of goods sold this quarter mostly reflects the cost of making the chips during last quarter and beginning of Q1, when the yield problem was still around. Once these lower-cost K6s and K6-3Ds are being sold at the end of this quarter, the earnings picture will improve.

Adrian
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