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

To: wanna_bmw who wrote (59201)	10/18/2001 7:00:23 PM
From: andreas_wonisch	Read Replies (3) \| Respond to of 275872

Wanna, Re: I remember AMD's Q3 forecast, which said that any fall in revenue would be due to flash and not CPUs, and I assumed that this was still mostly valid. I was also very surprised to hear that flash was still profitable (but probably close to break-even -- my guess). That must mean that the CPU business is much worse than we think. So almost all losses came from the ~500 million CPU revenues alone. Extremely disappointing. Andreas

To: wanna_bmw who wrote (59201)	10/18/2001 8:36:02 PM
From: combjelly	Read Replies (1) \| Respond to of 275872

"AMD will have to face up to the fact that their core CPU business has become unprofitable for them, which is even worse than a downturn in flash, IMHO." You are counting two different things. AMD's flash is profitable in the sense that they are selling their output for more than the cost of production. But if the flash is required to amortize the cost of the fab also, it lost gobs of money. AMD's deal with Fujitsu is written so that they get the chips for basically the costs of production, AMD supplied the IP and Fujitsu supplied the fabs. When sales are good, both companies make out like bandits. When sales are bad, Fujitsu takes it in the shorts. That is why AMD bought the Gresham fab from Fujitsu. AMD's core CPU business is not profitable because the Dresden fab is not ramped up, but AMD still has to pay for it and the fixed costs of Fab25 also, which is producing flash, Durons and whatever else. It is the fixed costs that led to the loss in Q3. Now with the Athlon XPs on the market, they have a good chance of erasing that deficit.