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To: Ed Beers who wrote (27319)1/28/1998 4:47:00 PM
From: DavidG  Respond to of 53903
 
Ed,

Larry, I don't see any disagreement between $2.50 to $3.00 production cost and
the net costs being suggested by Skeeter and Earlie.

One of the problems I see with their definition of NET COST for 16mb DRAM and SDRAM is that they include all the SG&A, all the R&D and all other MU expenses to calculate the 16mb cost. This is wrong because there are so many other products going on at MU that are built into those items such as PCs, 64mb DRAM/SDRAM, SGRAM, SRAM, Flatscreen, microstamp, 256mb, etc.

Especially since most of the other products don't make money they completely distort the meaning of this NET COST term for 16mb DRAM.

The only cost that makes sense for 16mb DRAM/SDRAM is $3.00 production cost. If someone could factor out the 16mb SG&A and R&D and other costs specific to 16mb then a NET COST could be derived.

DavidG



To: Ed Beers who wrote (27319)1/29/1998 12:30:00 AM
From: Skeeter Bug  Respond to of 53903
 
it, it is funny how so many people don't understand that "cost" is nearly meaningless unless you specify net or gross. gross is production cost. this is common knowledge.

all you need to do is multiply (1 - the gross margin) by the asp for the q to get gross cost - or, at least, a decent estimate.

mu had production, or gross costs, very close to $3.00 last q. what's the big deal if it is close to $3.00 this q? i do expect a 10% decrease in gross costs per q.


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