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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: milo_morai who wrote (3781)	8/6/2000 7:04:18 PM
From: Milan Shah	Respond to of 275872

Really? The issue is not whether AMD has scored a hit with the Athlon or not. The issue is whether AMD is "over investing" in fabs etc. which will bite it big time in the future if there is a cyclical downturn. The question is what has been the fixed cost increase that AMD has incurred to generate the $1B profit. Does anyone have figures on this? In some sense, almost all of the cost of increased production can be deemed as fixed cost - if AMD had to slash its output by 50%, I bet there would hardly be any dent in the reduction of materials. Perhaps layoffs etc can be reduced proportionately, but not much else. On the other hand, I can think of only the Dresden fab as a new one. Its not as if AMD has gone off and built 6 new fabs, financing it with a huge amount of debt. If AMD has indeed taken a step up in market share and has reached a level where a $1B profit can be sustained, then I think its an incredible buy at these levels. My bet is on the latter, and I am long AMD, but to think that there is absolutely no downside to AMD would be falacious thinking. Milan