Originally posted by: Viditor
Originally posted by: Phynaz
Originally posted by: Viditor
Originally posted by: hans007
Originally posted by: Phynaz
Originally posted by: Viditor
Originally posted by: Regs
AMD sells each chip for a profit margin (-cost of goods sold). The only problem is do they make enough profit off of each chip sold to cover all the operating expenses accrued in different accounting periods? The financial statements I've seen so far show that they did not, and that's no big secret, with -5.15 earnings per share.
Going backward, the answer is no...but the vast majority of those expenses are going to be gone now (remember that they no longer own the Fabs). So, going forward, those same profits should show some very nice returns...we shall see.
You're failing to read the agreement again. AMD is on the hook for a portion of the losses sustained by GF.
AMD also owns like 35% of GF so they are on the hook for 35% of the losses, and the costs of fabs maintenanec and employees etc are passed on to them anyway as a GF client.
According to GAAP rules, even though AMD votes 50% of the shares, their ownership is less than 50%...that means that (just as happened with Spansion) GF losses are no longer on their books.
What will be on their books as an asset will be the stock value in GF...
Oh Rly?
1st quarter conference call:
As reported in our 10-K, capital expenditures for 2009 will be about $150 million for AMD Product Company and about $760 million for GLOBALFOUNDRIES.
Why then are they spending capital on GF?
Because the agreement says they must provide funding.
What??? Please highlight that portion of the agreement. I've read it, and I've never seen any such thing.
At the conference call they were merely reporting on what GF is doing because they created GF in that quarter (March 2).
You will notice that they said
AMD will have only $150 million in Capex for the year...as opposed to $624 M in 08, and $1.685 Billion in 07
On the cost side of the equation, you know, to get simple it?s two big levers; factory utilization which today is very low, so clearly as I said we?ve got plenty of supply. We just need to run the factories a little bit harder if we see the demand. And then shipping 45 nanometer and 40 nanometer stuff whether that?s a CPU statement or a GPU statement. Those are the two big levers on the cost side of the equation.
Hmmm...factory utlilization affecting profits...sounds like they are on the hook for GF loses.
As I said, GF did not start until the quarter was almost over...March 2.
Also, factory utilization ALWAYS effects profits (even with the chips AMD has made at TSMC). "The larger your order, the lower your price" is a common business practice.
How do we think about the gain loss on Foundry operations in the second quarter?
You know, it?ll be at a loss. I guess I would frame it this way. It?ll be in a loss position as Doug outlined at the analyst day as it continues to try to build out the requirements to become a separate company, to hire a sales force, buy or build the right technologies to sell to somebody else besides AMD. So it?ll incur losses
AMD losing money on GF operations in the second quarter.
I can't wait for how you attempt to spin this, if you even bother replying.
What? Please highlight where it said AMD is losing money over foundry operations. He is saying that GF will be losing money there, not AMD...
Talk about spin...!!
Well, think of it this way, I mean, you know, we?re in that early stage where the manufacturing assets that were in place are to build microprocessors because we?re the only customer. And what we cut I?ll call it in the initial stages of the deal is responsibility to manage costs and to manage the loading, and therefore also pay for that cost. So that?s why I kind of said that, you know, utilization does affect us.
It will be great if you say Robert Rivet is wrong.
All he is saying is that the finished wafer pricing to AMD will be higher at the outset to help defray startup costs. That's why Rivet says that utilization effects AMD...but he goes on to say that it's a short term problem (the initial stages of the deal).
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