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To: TimF who wrote (156760)	1/24/2002 3:39:51 PM
From: Elmer	Read Replies (3) \| Respond to of 186894

Each sale makes an incremental profit. If they had more volume they would make a profit. Tim, they're essentially running at full capacity now and losing money. Just how do you improve on that with falling ASPs? The competition is shipping high volumes of high APS parts and AMD is once again forced to compete on price. Price competition has always meant red ink for AMD. EP

To: TimF who wrote (156760)	1/24/2002 6:10:23 PM
From: L. Adam Latham	Read Replies (1) \| Respond to of 186894

twfowler: Re: Also AMD made a small profit for the year and was cash flow positive for the year so it can be argued that even including overhead they did not sell at a loss. Don't start that pro forma b.s. - AMD lost $60 million in 2001. After the Enron mess, I'm now a believer in using GAAP earnings, and using pro forma numbers only for quarter/quarter or year over year comparisons (yes, even for Intel). And AMD's cash balance as well as current assets decreased in 2001 (as did Intel's). And as far as incremental profits go, they don't flow to the bottom line - fixed costs must be accounted for. If AMD is capacity constrained, they cannot increase volume to help the incremental profits cover fixed costs, and they will continue to lose money. Adam