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

To: pgerassi who wrote (75438)	3/24/2002 6:30:53 PM
From: hmaly	Read Replies (1) \| Respond to of 275872

Pete...Depreciation is due to the government not allowing expensing of capital equipment 100% outright and the allowed schedules are longer than the equipment becoming obsolete. <<<<< The gov. allows expensing of equipment that has a lifetime of less than 1 yr. In our business, that would be saw blades, cords, drill bits, etc. If a piece of machinery lasts longer than 1 yr. it must be depreciated, over the lifetime, and there are different schedules for different types of equipment. I would bet that overall, the depreciation schedules are generous. Also, of the 7.5 bil. CAPEX, while I haven't seem a breakdown, my guess is that the fab and land would at least be 40% of the cost. Just a guess though. The truth is that Intel may need to spend more than you think to keep up with a quick good competitor. Yet, this overhead of fixed costs for Intel is much higher per unit than AMD.<<<<< Take out the word "much" and I have no problem with that. And while Intel has higher fixed costs in equipment, Intel could have less costs/chip in other areas, such as engineering, because of Intels 4x volume. As to those expensive Xeons and Itaniums, well the later doesn't sell enough to cover its fixed costs much less subsidize any others and the former is beginning to slide backward as AMD rises. <<<<< That is a stretch, and I certainly didn't see any proof of that. Dual Athlon MPs already take dual Xeons and most quad Xeons and leaves them coughing in its dust.<<<<< From what I have seen at Aces's, the 1.7 MP is comparable to the 2 ghz NW Zeon; however in price/performance, AMD has a big lead. Their only real hope is for the market to stage a strong resurgence beyond almost anyone's wildest dreams. <<<< Or Intel could forego a price war, and by limiting demand, keep prices up until Intel can compete in price/performance arena. AMD doesn't have enough production to seriously hurt Intel yet.