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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Petz who wrote (29497)	3/4/1998 5:58:00 PM
From: Aaron Cooperband	Respond to of 1574005

John - Re: "Is there something wrong with my arithmetic PROFIT=REVENUE-COST?" I've been reading Paul's estimates of cost as well. It seems to me that he is calculating only the incremental cost of producing a wafer. The reason I keep on mentioning depreciation is that IBM must cover this cost as well. They purchased the equipment and must make back the cost of the equipment over time - i.e. depreciation. Anything above and beyond these costs will be profit. Similarly, AMD will still be employing its engineers in an effort to solve its production problems, and they will have to continue to depreciating their equipment as well. These are real costs of doing business and must be passed on to the consumer or eaten by the shareholders. Since nobody knows the actual cost per chip/wafer to AMD of the deal, everyone's calculations are simply speculation. My point is that this is clearly not a low cost solution to AMD's problems. Given the market segment they are competing in, I doubt that anything but a low cost solution will help their situation. Aaron