"For my disclosure, I bought intel shares after it dropped to 22, thinking it will fill the gap up to 25 or 26 when the dust clears."
Appreciate your providing siclosure.
"One puzzling thing in AMD's balance sheet is that, in q4, plant and equipment (PPE) dropped from $4.3B to $2.7B, even though AMD spent several hundred millions on fab 36. I know that AMD transferred assets to Spansion. The spansion investment is valued at $720m. So where did the remaining $800m go ? "
Been a long time since I studied accounting, but prior to spinoff, SPSN was characterized as a Minority Interest, in which case, I'm assuming that all SPSN plant was on AMD's books. I also notice that SPSN's plant now records PPE at $1.6B, and as you point out AMD's is now lower by same, which probably explains the missing $800M.
"My guess is that fab 36 will have high base costs, and products from it (if sold at current ASP) will have much lower gross margin than currently achieved from fab 30. But this only an uninformed guess, and I am hoping discussion here can improve it into an educated guess."
Hard call here. Obviously depreciation costs increase as Fab 36 is brought on stream, but so also do margins improve immensely as the shift to 65nm takes place. Given accelerating demand for AMD Opteron-family product, I'm guessing that breakeven production out of Fab 36 occurs much sooner than later.
I'm thinking that Mr. Rivet will choose a depreciation schedule that will match the expected ramp of Fab 36 so as not to impair the overall operating profit range currently 20% to 25% and improving to 30% after about 1 year of Fab 36 production. |
