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To: kash johal who wrote (2215)	7/25/2000 2:52:31 PM
From: Goutam	Read Replies (1) \| Respond to of 275872

Kash, < n addition, "all other" includes certain corporate-level operating expenses (primarily the amount by which profit-dependent bonus expenses differ from a targeted level recorded by the segments) and reserves for deferred income on shipments t distributors not allocated to operating segments. Adjusted for this distributor deferral, IAG revenues would be approximately $6,760 million in Q2 2000, $6,650 million in Q1 2000 and $5,850 million in Q2 1999. Accordingly, "all other" revenues would be approximately $1,540 million in Q2 2000, $1,340 million in Q1 2000, and $900 million in Q2 1999. intel.com; So if you look at Q1 2000 they reported IABG revenues as 6,581 but after factoring disti reserve is now figured as 6,650 per above Q2 release. This is IN CLEAR contradiction of your statement that they book all sales and then reduce downwards if there are cancellations. > But how about Q2'00? They expect the final number after taking into account of the deferred sales, IAG Q2'00 revenues would be approximately $6,760 millions. IAG Q2'00 revenues reported were $6,952 millions. I'm just curious. If you put together Q1 & Q2 IAG revenues reported vs the numbers with disti reserves factored in, it would look like this (if their Q2# with dist reserves factored in comes close to their expectations): (Reported) Q1,00 Q2,00 $6,581M $6,952 o_____________________________________o Q1 ==> Q2 +$371M o_________o Q1 ==> Q2 +$110 $6,650M $6,760M Q1,00 Q2'00 (After factoring in the deferred sales reserves) Goutama

To: kash johal who wrote (2215)	7/25/2000 5:03:22 PM
From: pgerassi	Read Replies (1) \| Respond to of 275872

Dear Kash: Re: Intel sleight of hand with respect to disti. You should notice that Other revenues rose by the same amount that IAG revenues declined after adjustment. Thus, a reserve in Other is inverted (slush fund?) in IAG. Therefore Petz's accusation is brought out by the facts as you quoted them. IAG 2Q (6952-6760=192) vs Other 2Q (1348-1540=-192). IAG 2Q99 (5559-5850=-291) vs Other (1191-900=291). Overall revenues were no different but IAGs Profits in Q2 were exaggerated in 2000 but reduced in 1999 (AMD was weak in 1999 but strong in 2000!). Of course this reserve may be just a convenient fiction, but since there is a line in AMD's balance sheet that appears similar and that means those revenues not yet realized, finalized, as revenue, like AR, Intel seems to do the right thing in the overall numbers BUT NOT FOR IAG OPERATING PROFITS. If this factor is pulled from their IAG profits, their GM is only 45% in Q2-2000 and the same in Q2-1999 (a telling point since motherboards and chipsets accounted for more revenue in 1999 than 2000 relatively). Perhaps next year they will restate this year back to even to reduce this year by 192 million (or more) to make Q2 2001 look good (rapid rise in operating profit). To check if they keep restating this "reserve", it might be nice to see what they claimed revenues for Q2 1999 in that Q2 report last July. Anyone have the original report? Pete