Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Longshot who wrote (48540)	2/4/1999 6:45:00 PM
From: Yousef	Read Replies (1) \| Respond to of 1572336

Longshot, Re: "Ahh Yousef, I did not write those comments." Sorry Longshot ... Looks like I "shot" the wrong messenger. <ggg> Make it So, Yousef

To: Longshot who wrote (48540)	2/5/1999 12:05:00 AM
From: Petz	Read Replies (3) \| Respond to of 1572336

Useless, >>Intel is making money on their "low end" processors<<. 1. From Intel Q4 conference call, ASP at Intel is "well over $200" 2. R&D + MG&A estimate for Q1'99 is 1.55B 3. Depreciation for Q1'99 is 0.82B 4. Direct Cost of sales (defined as cost of sales less depreciation) was 3.176 B - 0.78 B = 2.4B in Q4'99. 5. Intel's sales are about 75% microprocessor, and 25% other. We will assume that R&D is 75% microprocessor related, and MG&A (marketing, general and administrative) is 75% microprocessor related. If anything, this percentage is too low. 6. Intel's gross margin is higher on microprocessors than on other products (networking, chipsets, motherboards, etc.) so we will assume that only 2/3 of Direct Cost of Sales, rather than 75%, is attributable to microprocessors. 7. Intel sold 26M microprocessors in Q4'99 (+- 1M) 8. Therefore the costs per microprocessor are as follows: 1)direct costs (i.e., wafer costs) = 1600M / 26M = $61.54 2)R&D + MG&A = 1550M0.75/ 26M = $44.71 3)Depreciation = 820M0.75/26M = $23.65 Gross Margin is calculated on costs including direct costs plus depreciation, which gives a cost of $85 per CPU. Clearly the gross margin on Celeron's is NEGATIVE. But with Intel's other CPU's averaging about $300 their gross margin of (300-85)/300 = 72% is subsidizing the loss on the Celerons, resulting in an overall gross margin of about (225-85)/225 = 62% in CPU's overall. These gross margin numbers are close to what the analysts have been saying, and therefore validate the cost per CPU shown above. Petz