0914 The Bombs

HELLO,Mr. Ronto. Our terminology may be wrong,so please look at it with patience.

IN-CLASS EXERCISE: Analyzing Income Statement and CFS Read over the financial tables given below. After analyzing the tables, decide which company you would prefer to invest in. Be prepared to give your reason.

Intel Corporation is a semiconductor chip maker. The Company is engaged in developing advanced integrated digital technology products, primarily integrated circuits, for industries, such as computing and communications. Its primary component products include microprocessors, chipsets, wired and wireless connectivity. (hoovers.com) Intel Corp. INCOME STATEMENT 2008 2007 2006 Revenue ($mil.) 37,586.0 38,334.0 35,382.0 Gross Profit ($mil.) 20,844.0 19,904.0 18,218.0 Operating Income ($mil.) 7,694.0 9,181.0 7,092.0 Total Net Income ($mil.) 5,292.0 6,976.0 5,044.0 EPS 0.92 1.18 0.86 STRENGTHS: 1. The company's large scale, market share, sales stable, little change in total revenue. 2. Sell better cost control, three rates were 44.4%, 45.07%, 45.5%. 3. Per-share earnings stability, the stock has income, increasing the confidence of investors.

WEAKNESSES Operating costs of instability, changes in the rate of large, three-year ratio of 63.1%, 53.8%, 61.1%, resulting in an annual revenue instability, relatively large fluctuations in

Intel Corp. CASH FLOW STATEMENT Dec08 Dec07 Dec06 Net Operating Cash Flow 10,926.0 12,625.0 10,620.0 Net Investing Cash Flow (5,865.0) (9,926.0) (4,907.0) Net Financing Cash Flow (9,018.0) (1,990.0) (6,439.0) STRENGTHS: 1. Main business income of large, stable cash income 2. The amount of cash inflows from operating activities is greater than outflows, cash inflows from investing activities less than the outflows, fund-raising activities, cash inflows less outflows, the explanation for entrepreneurial activity and borrowing can generate net cash inflows, indicating the financial situation of the more stable 3.Multi-dividend, earnings Stability, and increase the confidence of investors 4. Increased investment to expand the company size, improve productivity and then WEAKNESSES: 1.07 years devoted a lot of money, but in 2008 has not been substantial growth in earnings 2. Price instability, come up with a lot of money stable stock prices and dividends 3.company's Cash inflows from operating activities is greater than outflows, cash inflows from investing activities less than the outflows, fund-raising activities, cash inflows less outflows, the description mainly rely on operating cash inflow from operating activities, once the operating conditions of a crisis, the financial situation will deteriorate.

Advanced Micro Devices, Inc. is a global semiconductor company with facilities around the world. The Company offer x86 microprocessors, for the commercial and consumer markets, embedded microprocessors for commercial, commercial client and consumer markets and chipsets for desktop and notebook personal computers (PCs), professional workstations and servers. (hoovers.com) AMD INCOME STATEMENT Revenue ($mil.) Gross Profit ($mil.) Operating Income ($mil.) Total Net Income ($mil.) EPS

2008 5,808.0 2,320.0 (1,980.0) (3,098.0) (5.10)

2007 6,013.0 2,262.0 (2,799.0) (3,379.0) (6.06)

2006 5,649.0 2,793.0 (17.0) (166.0) (0.34)

STRENGTHS: 1.07year's cost of sales/net sales is 62.3%,and 08year's is 60.1%.This shows that AMD's 07-08 year’s cost of sales is relativily decrease. 2.07year’s operating expenses/gross income is 289.5%, 08year’s is 244%. This still shows that AMD’s 07-08year’s operating expenses is relativily decrease.

WEAKNESSES: 1. AMD’s 06,07,08year’s operating expenses/gross income are 102%, 289.5%, 244%. This shows that AMD’s operating expenses is TOO high. 2. Gross margin is too small, AMD’s 06,07,08year’s gross margin separately are 49.4%,37.6%,39.9%, so this shows that the company operats badly.

AMD CASH FLOW STATEMENT

Dec08

Dec07

Dec06

Net Operating Cash Flow

(692.0)

(310.0)

1,287.0

Net Investing Cash Flow

(27.0)

(1,675.0)

(4,303.0)

Net Financing Cash Flow

220.0

2,037.0

3,763.0

STRENGTHS: 1. AMD's share price stability. WEAKNESSES: 1. Cash inflows from operating activities less than the outflow from investing activities Cash inflows than outflows, fund-raising activities, cash inflows than outflows, the note business operations and investment activities, can not generate sufficient cash flow, activities totally dependent on borrowing to maintain, once the debt difficulties, financial situation will be very dangerous. 2. Investment is too small, affect the scale of development, detrimental to the company to expand production. 3.AMD’s 06,07,08year’s company cash flows are 747, -52,-436, This shows that the lack of liquidity in the company.

If we are investors, our investment will pay attention to two points, one return on investment, and secondly, capital security. Through our analysis, INTEL relatively stable market operation, high safety of investment funds. However, the investment income growth is not obvious. Although the market share of AMD smaller, recent poor management, but the company is a good development trend, if the investment in AMD may get higher returns, but at higher risk. Through panel discussions, we believe that more money should attach importance to safety, so we invest in INTEL.