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

To: Ali Chen who wrote (78680)	4/28/2002 9:02:34 PM
From: wanna_bmw	Read Replies (1) \| Respond to of 275872

Ali, Re: "To make an easy example for you, suppose you deposit your paychecks to one account, pay for living and your house from it, and a couple of hundreds is still left for savings. Yet you buy a 850Ci, and pay installments from your wife's account, and the installments exceed your savings on the first account. Would you consider your family lifestyle as profitable?" Let me give you a different example. Let's say I make $80k a year, and I have a bank account with $40k inside. I decide to buy a $30 car, and pay for it all in cash from my bank account. Let's also say that from the earnings from my paycheck, I also pay $30k in taxes, $25k in my regular expenses, and I put the remaining $25k in the bank. Your argument is sort of philosophical in nature. According to you, I lost $5k last year because I put $25 into the bank, but spent $30k on a new car. I would say that I earned a profit of $25k that year from revenues of $80k; meanwhile, my assets changed from $40k to $10k. Later, when I deposit my income, my bank account would be worth $35k. If I were a public corporation, I might want to record it my way. After all, the income or loss from revenues was exactly positive $25k. The fact that my bank account was depleted is irrelevant. That's money that I had previously made, and I consider it savings. It has nothing to do with my earnings for the year. If you were a public corporation, you would be recording a loss every time you dove into your bank account, and it exceeding your regular earnings. That's slightly inaccurate, because drawing from your bank account is not an "expense", but rather a "cash flow". Similarly, when Intel buys back stock, they are paying for it out of their "bank account", not out of their revenue for the year. But if you want to argue semantics, then go ahead. It's all academic, and it barely applies to the legality of Intel's accounting. But many investors look at assets as much as earnings when picking a stock. If you are one of those people, then go ahead and rate Intel the same way. Just be aware that you apply the same principles to AMD, who just recently took out a sizable loan. That would surely put them in a less favorable light, from your point of view. wbmw