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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Windsock who wrote (138801)	7/7/2001 6:19:51 PM
From: COMMON_SENSE	Read Replies (1) \| Respond to of 186894

Which returns me to my original question.... If capital costs do not get booked in expenses as Windsock says. And if depreciation costs do not start on a fab until the fab goes into production. And if AMD makes as little profit as they have made this quarter (about $15 million possibly), how do you afford to build a new $2 billion fab unless you borrow to the hilt? If you can't innovate and do the R&D and build the newer plants, how can you keep up with the leader in the Industry. So isn't it really just a short time in history when Intel was racing a tight race against AMD during 1999-2001 and doesn't it stand to reason that AMD will have trouble keeping up with Intel on spending.

To: Windsock who wrote (138801)	7/7/2001 8:07:16 PM
From: Dan3	Respond to of 186894

Re: Capital costs do not get booked in expenses. And depreciation costs do not start on a fab until the fab goes into production. STAND BY FOR AN IMPORTANT NEWS BULLETIN.... <pause> --- DRESDEN HAS GONE INTO PRODUCTION!! It actually happened some time ago! So as additional investment is made at the plant, AMD begins depreciating it immediately. :-) Your other point is a restatement of the one I was making: Capital costs do not get booked as expenses. Yet companies have costs for their plant, especially capital intensive industries like the semis, so how do accountants handle this conundrum? Depreciation! Capital costs show up on the income statement as depreciation. Since the benefits of an investment in plant can continue for many years, the whole plant isn't expensed all at once, instead a percentage is expensed each year. Now, it is possible to claim the yearly costs of plant shouldn't have anything to do with the yearly expense taken for plant, but I would suggest that, in an industry where basically the same product (CPUs) has been, for decades, the main output of the aggregate "plant" in question, and where plant more than 5 years old is worth very little, depreciation should be pretty much be in line with "plant" expenditure. As is the case for AMD and most definitely is not the case for Intel. Regards, Dan