RDM, your analysis showing gross margin (GM) on Celerons of 30% is a good start but that does not mean that the Celeron line is being sold
above "cost" and is, therefore, legal.
First, any Celeron being sold for less than (1-0.3)*90 ($63.00) is obviously being sold below cost.
Second, the definition of "cost" used to compute "cost of sales" and
"gross margin" does NOT include marketing, general and administrative
(MG&A for short) or R&D expenses. These two items in Q1 were 891M
and 663M, respectively. Alloting 20% of these expenses to other
businesses, leave 713M and 530M, respectively. We should apportion
41% of these costs to the Celeron (9.77M units out of 23.87 total units). That adds $509M to the costs of the Celeron, or $ 52.7 per Celeron. Using a definition of cost which includes MG&A and R&D, clearly the Celeron is being sold below cost of $116.
Perhaps Intel lawyers would try to apportion the MG&A and/or the R&D
proportionate to the revenues realized from the 3 product lines rather
than according to the number of units shipped, which is clearly illogical (how much advertising for Xeon have you seen?). Doing it that way adds $19 to the cost per Celeron, making total cost $82, perilously close to the assumed $90 ASP.
Petz |
