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

To: Bill Jackson who wrote (149160)	11/22/2001 8:24:01 AM
From: Dave	Read Replies (2) \| Respond to of 186894

Bill, In a price war, AMD might win the battles, however by focusing on lower prices casuing AMD to lose money will, in the end, cause them to lose the overall war. You can't win on price alone. With AMD constantly driving the prices down, causes AMD to bring in less cash each quarter. When you view AMD's last 10Q, a couple of points to consider... Over the past 9 months, AMD generated 56M in cash from operations. Assume CFO does not deteriorate, AMD has an annualized CFO of 74.67M. AMD, currently, has a cash, equivalents, and ST Investments position of ~903M. However, AMD has a current portion of LT Debt, etc. of 192.5M, meaning that 192.5M is due within at most 365 days from 30 Sept. 01. Additionally, AMD has interest expenses (annualized) of 152M (from Cash flow statement). It is pretty clear to me that AMD has too much debt in its capital structure and must find ways to reduce its debt. However, does AMD need to continue to spend to increase its PP&E???? Pretty much, in order for AMD to generate the cash necessary to continue operations, AMD issued additional debt and stock. AMD is at a critical juncture at this point in time. Over the past 9 months, AMD spent over 550M in PP&E, thus causing their FCF to be -500M. The critical juncture is this, do they need to continue to modernize their facilities? If so, should AMD issue more debt, causing their Interest expense to increase? If they issue more debt, and their earnings situation does not improve, CFO will continue to go down. Next, AMD could choose to issue equity, causing dilution. Or, AMD could choose to do nothing and no longer modernize.

To: Bill Jackson who wrote (149160)	11/22/2001 1:28:16 PM
From: wanna_bmw	Read Replies (1) \| Respond to of 186894

Bill, Re: "So far AMD has not yet lost the war and Intel has indeed lost far more money in the conduct of the war than AMD." So far, Intel hasn't lost any money, and that is exactly the point, Bill. If you want to argue "potential" sales, then you should take into account economic conditions as well. AMD is certainly not entirely responsible for Intel's reductions in profits since last year, even though they are a contributing factor. The important thing to remember is that AMD is not yet out of debt, and they are predicting losses over the next several quarters. They are also planning on a lot more fab capacity, as well as depending on more expensive fabrication processes. Not only that, but they are willing to give up their advantage of controlling their own output, and instead are depending on outsourcing. There is no doubt about it: AMD is going further into debt. There is nothing worth rejoicing over that, and in terms of your battle vs war metaphor, the stakes in the battles that AMD is losing are higher than the stakes for Intel. wbmw