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

To: Elmer who wrote (47945)	1/31/1999 12:57:00 AM
From: RDM	Read Replies (1) \| Respond to of 1580396

Some further "back of the envelope" analysis: Intel earned $6 Billion in 1998, but this was almost $1 Billion less than 1997 ($6,068M vs $6,945M) despite an increase in sales of $1 Billion. They sold more and had less profits primarily due to AMD. Intel is an extraordinary company with extraordinary profits. While they may be able to have a low manufacturing cost for DIXON they must keep the profits coming in to preserve shareholder value. $6 Billion in profits does not happen without selling lots of parts 100,000,000) and making a lot of profit on each one ($60). It will be interesting to look at the results of 1999. Will Intel continue to maintain the $60 after tax profit per chip? In addition to profits Intel has $5.1B per year in expenses not associatedd with manufacturing (R&D, Marketing, G&A, etc). We must not forgfet the $3B in income taxes. This $8.1B amounts to another $81 per chip or a total of $141 "fixed costs" per chip that they must average to maintain shareholder value. These costs I describe as fixed becuase they do not change with die size or manufacturing efficiency. AMD has only roughly $45 per chip similiar costs and these would grow to only $68 per chip if these costs included a very healthy (for AMD) $4.00 per share annual profits. This difference in non-production, "fixed costs", amount to $73 per chip in favor of AMD. This is a round about way of saying that Intel has a hard time to price bomb products in their mainstream business without hurting their own shareholder value more than Intels.

To: Elmer who wrote (47945)	1/31/1999 12:20:00 PM
From: DRBES	Read Replies (2) \| Respond to of 1580396

re: "Most people don't realize that if Intel sold ~100 million processors then they sold ~200 million units out of their chip set division and at a nice profit too I'm sure." Fortunately among those that do are Compaq, IBM, and an increasing number of the major box makers who do not want their entire destinies totally controlled by a vertically integrated iNTEL that dominates everything that they (the box makers) put into their boxes. iNTEL may have prematurely flagged their long term intentions when they introduced their family of motherboards that included the "Atlantis". The "Atlantis" was a dog though it enjoyed having a few very tempting beneficial qualities: It had built in sound and video cards. It ran Windows 95 and Windows NT much slower but more stably than most, but certainly not all, competing boards. Unfortunately these were supplied with extraordinarily poor drivers from iNTEL. We suffered a great inconvenience when most of our customers who elected Atlantis based machines required us the do the internet available upgrades even though they were readily available on the internet and were user available. In many cases this turned a small profit into a loss when the costs of our labor were factored in. iNTEL kept the poor driver version of the "Atlantis" in the supply stream well after the new drivers were available causing us even further unnecessary problems long after it made any sense at all. The fear that Compaq, IBM, and many other box makers could well be that an unchallenged iNTEL that is vertically integrated will exert "kINGMAKER" control on the marketplace. The fear is that iNTEL might reward box makers such as DELL with advantages that can lead to market dominance while punishing the disloyal Compaq's and IBM's by making it more difficult for them to compete. I suspect that there are already numerous example of this. ANY THOUGHTS ???? Regards, DARBES