Replies to post #133333 on Intel Corp (INTC)

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The contra-revenue per Bay Trail-v0 is $20, and for Bay Trail-Entry it is about $10.

[wbmw]

.....well for Baytrail at say 55% margin, cost would be $12 to produce.....$15/$27 = 55% margin.......so for the $15 payola scenario, contra revenue is ZERO....

You are using the term incorrectly, but you have the right idea.

It's a scenario (just a thought scenario, mind you) that Bay Trail ships with $15 of gross margin, but also, $15 worth of BOM rebates in the form of contra-revenue. Therefore, Intel ends up with $zero worth of net margin. They still get $15 of gross margin, however. You understand the difference between gross margin and net margin, right?

Intel is losing significant money in their mobile business, and so the math should make sense. They are likely making little to no net margin on Bay Trail, and still paying for all the operating costs for a business that designing a yearly product portfolio and shipping millions of parts.

for the $5 payola scenario, Intel makes a $10 PROFIT. So where's your scenario where there's enough payola to produce significant "contra revenue" at years end?

You are still using the terms incorrectly. A contra-revenue account simply accounts for the sum of the rebates, and gets added as a negative value on earnings for the quarter. Intel isn't in business to "produce significant contra-revenue".