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

To: dale_laroy who wrote (48736)	7/23/2001 10:34:51 AM
From: herb will	Read Replies (2) \| Respond to of 275872

Dale, "This is one case where Dan3 may be right" I fail to understand as usual what it is that Dan is complaining about. The following are footnotes to the current year end Financial Statements of both AMD and Intel. The fact that AMD depreciates machinery and equipment over three to five years compared with Intel’s 2-4 years only reflects that Intel’s policy is to turn over the investment in machinery and equipment faster. Depreciating machinery and equipment over a shorter useful life would of course reduce net operating income over that period and also require replacement sooner. AMD depreciates Buildings up to 26 years and Intel depreciates Buildings over a life of 4 to 40 years. Apparently Intel is getting better utilization with some of their buildings than AMD. Pardon me for saying that I think it is ludicrous and also insulting for Dan to claim that the accountants hold AMD to a much more rigorous depreciation schedule than Intel. Herb AMD Property, Plant and Equipment. Property, plant and equipment are stated at cost. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets for financial reporting purposes and on accelerated methods for tax purposes. Estimated useful lives for financial reporting purposes are as follows: · machinery and equipment, three to five years; · buildings, up to 26 years; and · leasehold improvements, the shorter of the remaining terms of the leases or the estimated economic useful lives of the improvements Intel Property, plant and equipment Property, plant and equipment are stated at cost. Depreciation is computed for financial reporting purposes principally using the straight-line method over the following estimated useful lives: machinery and equipment, 2–4 years; buildings, 4–40 years. Reviews are regularly performed to determine whether facts and circumstances exist which indicate that the carrying amount of assets may not be recoverable. The company assesses the recoverability of its assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining life against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets.

To: dale_laroy who wrote (48736)	7/23/2001 11:22:00 AM
From: Elmer	Respond to of 275872

If a company like Intel depreciates their plant using this same 5 year rate they may not be depreciating their plant fast enough if they replace their plants in two or three years. Virtually every plant Intel has built in the last 15 years is still open and active. EP

To: dale_laroy who wrote (48736)	7/23/2001 2:24:13 PM
From: Paul Engel	Read Replies (2) \| Respond to of 275872

Re: "If a company like AMD depreciates their plant over 5 years, this may be accounting that reflects reality because AMD actually uses their plants for more than 5 years." HOG WASH !!! First, the bricks & mortar are depreciated at one rate - about 20 years - and the equipment at another rate - possibly as little as 5 years. Now - take AMD's fabs- Fab 25 was started out as a 0.5 micron fab in 1995 - and because of the K5 disaster, it had to be converted RAPIDLY to 0.35 processing. When the K6 arrived at 0.35 micron, it had a limited scalability and once again Fab 25 had to be UPGRADED to 0.25 micron in 1998 !! Then, after the AThWiper was introduced in 1999 at 0.25 micron, Fab 25 had to be UPGRADED once again to 0.18 micron. I'll let you fill in the blanks on FAB 30 and how it had to be upgraded from aluminum to copper before it even got off the ground ! FACT - AMD RUNS THROUGH PROCESS AND EQUIPMENT CHANGES FASTER THAN INTEL and incurs - on a per fab basis - FASTER DEPRECIATION than Intel