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Politics : Formerly About Advanced Micro Devices

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To: Scumbria who wrote (58636)	5/18/1999 1:43:00 PM
From: kash johal	Read Replies (5) of 1571931

Scumbria, Re: Margins Stop posting this krapola on margins when you clearly don't know how they are calculated. 1. GROSS MARGIN You take your manufacturing cost and DIVIDE by (1-%Gross margin). So it is IMPOSSIBLE to have greater than 100% GROSS MARGIN. So if it costs AMD $40 to manufacture the K6-2 then they have to sell it for $80 to get a 50% gross margin. 2. MARGINAL COST It is illegal to sell below the marginal costs. Marginal costs do not include costs such as depreciation etc. Intel marginal costs are in the $30-40 range for the mendocino. THEY are NOT breaking the law etc etc etc. 3. R&D As has already been pointed out R&D is expensed in the quarter that it is spent. SO the P6 CORE development and Mendocino CORE development costs have NOTHING to do with todays margins. R&D does affect the P&L. Todays R&D expenses are going into stuff like merced/0.13 process development etc. SO trying to add the previously expensed costs for P6 core to todays costs for Celeron to come up with a COCKAMAMIE analysis on why Intel is selling Celerons below cost is ASININE. Regards, Kash

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