Intel Corp (INTC)

[DewDiligence]

>> and the second piece covered the establishment of an [AMD] allowance against deferred tax assets of $263 million. <<

I’m going out on a limb because, until we see AMD’s detailed financial statements, we won’t know for sure. But taking an “allowance against deferred tax assets” essentially means that the assets in question are being wiped off the balance sheet. Such an action is usually an ominous signal.

Here’s why: “deferred tax assets” arise from tax loss carryforwards, i.e. past operating losses which can be used to offset income taxes on future profits. However, a company must actually generate future profits in order for such tax loss carryforwards to be worth anything. Hence, a decision by a company to write down such deferred tax assets is in essence a statement that profits in the foreseeable future are unlikely to be large enough to fully utilize the tax loss carryforwards.

So you can see why this is indeed an ominous sign for AMD. FWIW. Dew