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

To: wanna_bmw who wrote (85238)	7/17/2002 7:21:43 PM
From: Robohogs	Read Replies (1) \| Respond to of 275872

Nice comments - probably what is happening. I must add that reducing the number of chips coming out to as to keep inventory flat will increase per chip manufacturing costs as overheads and labor are divided into fewer chips coming out. Probably reason for such a big loss. Even selling only 6 MM chips (down ~ 2 MM), breakeven was at $900 MM ($600 MM revenue + 300 MM loss), implying higher breakeven if they sell 7-8 MM chips (or very little in way of variable costs). BTW, based on your $720 MM number, they should lose $180 MM plus incremental cost of the extra chips less the reduction in costs due to 130 nm. There will be no real tax savings as the total taxes paid over the last three years was $130 MM. They already put in for refunds of $30 MM in Q1, implying no more taxes to recover (or very little). Look at officially filed cash flow statements in 10k and 10q. At the very bottom of cash flow statement is a section detailing actual cash payments. Jon

To: wanna_bmw who wrote (85238)	7/17/2002 7:25:41 PM
From: Joe NYC	Read Replies (1) \| Respond to of 275872

wbmw, You're close. I believe the inventory glut is external, or else you'd see AMD's internal numbers change (and they haven't). There was a discussion about this some time ago, and apparently, when the CPU die is in the die form, it is priced on cost basis, meaning cost of wafers + cost of processing. Once packaged, the price is that of finished goods. Suppose the valuation of packaged part is 3x to 4x the die cost, AMD can manipulate the inventory number any way they want to, just by deciding when to package the parts. So this number, internal inventory, becomes almost meaningless indicator. Further complicating the issue is the fact that the inventory is composed of both flash and CPU. I'd expect the Thoroughbred transition to happen very fast - almost over night. Agreed. Palomino transition was very fast so this one should be fast as well. The question is how soon will it happen. THe timing will tell us the magnitude of the internal inventory. Joe