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

To: Monica Detwiler who wrote (164201)	4/18/2002 12:23:35 PM
From: GVTucker	Read Replies (2) \| Respond to of 186894

Monica, RE: How can anybody in their right mind use a lame argument that AMD has lower costs than Intel? Well that's because you just don't look far enough into the numbers to figure it out. Sure, AMD loses money on each unit that they sell. But they're just trying to get the market share up so they can make it up on volume.

To: Monica Detwiler who wrote (164201)	4/19/2002 12:12:38 AM
From: Dan3	Read Replies (1) \| Respond to of 186894

Re: How can anybody in their right mind use a lame argument that AMD has lower costs than Intel? Their costs are lower - much lower. But their selling prices are also much lower. As CPUs move closer to being a commodity, it will likely become more and more difficult for Intel to keep its selling prices high. And, given their high costs, they stand a good chance of getting squeezed.

To: Monica Detwiler who wrote (164201)	4/19/2002 12:34:57 AM
From: Ali Chen	Read Replies (2) \| Respond to of 186894

Dear Monica, "How can anybody in their right mind use a lame argument that AMD has lower costs than Intel?" I am not sure which mind is right, yours or mine, but let's see. I know it might be hard for you with all the math, but try to follow: For IAG, Intel reported total sales of $5,768M with profit $1,802M. Which means that their official cost to produce 32M processors is about $4B, $3,966M. This means that the cost per CPU is $124, including unseparable costs to maintain the business, i.e. R&D and administration. ( 32M of Intel's CPU are calculated on 8M units from AMD and the alleged 20% of their unit market share) Now, AMD does not report the breakdown between CPU and flash, but even assuming the worst (best?) case that manufacturing of flash cost them zero, their total cost per CPU is $916M/8M = $114,5, under equivalent terms with Intel (+R&D+Mkt). Now you can say that AMD spends less for R&D and marketing, but this is the way how they managed to sustain their business so far, and do not forget that we assumed that their flash comes for free. Actually, since AMD does not trumpet flash financial victories, it would be safe to assume break-even, and subtract $160M from $916M of total expenses, which brings the cost per their CPU down to (916-160)/8 = $95. So, what do you think about costs now? - Ali