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

To: aleph0 who wrote (217278)	11/21/2006 11:19:31 AM
From: Plissken	Read Replies (1) \| Respond to of 275872

Maybe an attempt to shake out the small investors. Not too many shares around for institutional buyers anymore.

To: aleph0 who wrote (217278)	11/21/2006 12:51:32 PM
From: muzosi	Read Replies (1) \| Respond to of 275872

margin pressure is not just because of lower asp, it's also caused by "seasonally lower unit shipments", and "share loss to AMD" which is incredible given cmw is here at full force.

To: aleph0 who wrote (217278)	11/21/2006 1:43:58 PM
From: dougSF30	Respond to of 275872

Probably more that no one believes Prudential. They were the ones with the ~$60 target on AMD earlier this year.

To: aleph0 who wrote (217278)	11/22/2006 12:17:18 AM
From: Petz	Read Replies (2) \| Respond to of 275872

The reason given for expecting lower Intel margins is that they will be liquidating inventory in 1H07. This sounds counterintuitive, but I remember that AK2004 posted a brokerage report about 2-3 years ago that explained why growing inventories improves gross margins, and shrinking inventories lowers gross margins. The Prudential report aleph0 referenced explains it as follows: Accounting 101 tells us that fixed cost absorption improves when companies build inventories. In addition to the 138 million MPUs that Intel shipped to customers during that time period (Q1-Q306), we estimate that the company put another 30 million units into inventory for a total of 168 million units that were manufactured and absorbed fixed costs. Dividing the depreciation expense for the period ($3.5 billion) by the 168 million units that were manufactured translates to $21 per unit. Clearly, during the $1.4 billion inventory build, Intel’s gross margins were much better than if they had only manufactured what they shipped to customers. So the "fixed" costs of depreciation for the CPUs placed in inventory are not included in "Cost of Sales" while they are produced. Instead, these costs have to be added to Cost of Sales when the inventory is eventually liquidated. If any of you are slightly cynical, you might wonder whether Intel built inventory to manage gross margin expectations of the analysts rather than to manage their business. Petz