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To: Tenchusatsu who wrote (139072)	7/11/2001 6:31:55 PM
From: Dave	Respond to of 186894

Tench, The question is whether that order was made up of chips already in inventory (thereby contradicting AMD's previous statements that they have their inventories under control), or whether that order is an advance payment for chips made in Q3 (which amounts to bringing forth revenue from Q3 to Q2 just to make the quarter). when AMD formally announces their #s, take a look at their Account Receivables (A/R). If their A/R grows faster than revenues, then one can assume that the order was not allocated with chips in inventory. Until then, who knows....

To: Tenchusatsu who wrote (139072)	7/11/2001 7:04:38 PM
From: Windsock	Respond to of 186894

Ten - Re"I heard that order was around $60M, which at AMD's low ASP translates to nearly one million CPUs." The margin on the sale would probably change the earnings from a loss to a profit. If not adding a couple other tricks with accounts payable would make it happen. Re:"The question is whether that order was made up of chips already in inventory (thereby contradicting AMD's previous statements that they have their inventories under control), or whether that order is an advance payment for chips made in Q3 (which amounts to bringing forth revenue from Q3 to Q2 just to make the quarter)." It is highly likely that AMD signed a contract to deliver a number of processors over a fixed period of time, say the next 6 months. If the revenue is certain (the order is not cancelable) and the buyer's credit is good they can accrue the revenue in the current quarter. It is an eye brow raising practice but it is doable. Particularly when the results are unaudited. In any case, tricks to make Q2 will cause a hit later. Another variant is that AMD could allow staged payments of over time, essentially free credit. In any event, AMD would have to give a really sweet price to get a customer to do business this way.