14 DAY TRIAL // AMD is trying to capitalize as much as possible on the European Union's antitrust charges against Intel. That's why it commissioned a study that reports Intel's financial position compared to AMD's. Just published, this study claims that almost half of Intel's profits are ill gained, as a direct result of its monopoly and unlawful business practices on the computer processors market. According to this study, cited by the news site TGDaily, "Intel has extracted monopoly profits from microprocessor sales of more than $60 billion in the period 1996-2006".
The financial report and analysis was conducted by the consulting company ERS Group and Michael Williams, the Director of the firm, published the report and said that "consumers and computer manufacturers could save about $81 billion over the next decade, if the microprocessor market were open to competition", which practically means that if Intel were somehow forced to abandon its dominant position on the market, just about everybody would have something to gain. The report says that out of the $81 billion, the biggest part will represent the customers' saved money (about $61 billion), while the rest would belong to different hardware manufacturers, which would be probably more than happy to invest it into R&D (research and development) in order to gain access to better products.
According to the ERS Group's Director, all these estimates, including the ones concerning Intel directly are derived from public domain financial statements that every company makes from time to time, in order to calculate the company's economic profits. AMD said that the report is based on "the model used is based on research conducted by Merton Miller and Franco Modigliani, which is used by more than half the Fortune 1000 firms to analyze their economic performance". Using the numbers from previous Intel financial statements, ERS estimates that Intel most probably recorded profits of $141.8 billion during the last 10 year period and the consulting firm "subtracted competitive profits ($54.2 billion), economic profits ($87.7 billion), a portion of economic profits attributed to assumed advantages and then came up with estimated monopoly profits of $60.1 billion".
Over the last decade, Intel registered huge profits, but AMD came up with issues in terms of total profits, as it had to cope with the loss of $616 million, while the rival company came up with no less than $68 billion. The smallest Intel profit posted in this 10-year period was $1.3 billion, while AMD received a positive financial balance only four times. Its record earnings were registered in 2000, when the company ended the year with a profit of $983 million. During the same time period the smallest Intel profit advantage over AMD was at least 11 times higher, while the highest was of 53 times more and was registered in 2005.
