Dave -
Around 1989 or 1990, AMD's stock was about $4. They were in the pits. Then, they started producing Intel 386 compatible chips, and held their own against Intel in the courtroom during the time frame of all those AMD/Intel Law suits.
As Intel began to abandon the 386 (for the 486), AMD began to provide a wide variety of 386 variants - speed grades that Intel didn't provide. They found a ready and receptive customer base. Their sales soared, and thier stock did too. Eventually, their stock climbed into the high $30s - maybe even reaching the low $40s.
At that time, Intel's stock was selling for $40 (NOT CORRECTED FOR SPLITS). From then until 1992, their stock rose and fell, depending upon the latest outcome from the AMD lawsuits. But, in late 1992 their stock began to march NORTHWARD. Their 486 was rapidly gaining acceptance, and AMD and CYRIX were not out yet with their knock-offs.
Intel was also producing a wide variety of speed grades, clock doubled chips, eventually clock-tripled chips, write-back caches, 16K caches on chip, etc. They left no islands of opportunity to be exploited by their competition.
The 486 became the latest (at that time) cash cow for Intel.
Intel's stock ran up to about $120, then split 2 for 1, in mid-1993. At the post-split price of $60, it sort of wandered for 18 months, rising into the 70s, dropping down etc.
Then, the Pentium FDIV debacle hit and dropped the stock into the low $50s (maybe high $40s). Thanks to the news media, the two words PENTIUM and INTEL became household words, synonomous with Personal Computers (aided and abetted by the Intel Inside Campaign).
Intel escaped from this debacle in fine form, and as they ramped up their THIRD generation Pentium chips in early 1995 (0.35 micron), sales soared and so did the stock, again breaking $100. At the $120 - $130 mark, it split 2 for 1 again.
After the split, the bloom came off the rose and Intel's stock sank from $78 post split to the high $40s, and has recently reached the low to mid $70s again.
If one were clairvoyant and had bought both Intel and AMD in early 1990, and sold them at the top, the AMD investor would have been rewarded with a 9x to 10x increase. An Intel investor would have upped his net by 7x. Score 1 for AMD
However, for anyone who bought and held - AMD would have returned 3.5x, while Intel IS STILL providing nearly 7X returns.
Will the future reward AMD or INTEL? That is the question for investors.
Look at the companies - their product portfolios, their "franchises", their fab capacity - do you know how many 8 inch Fabs Intel has? One in Ireland, A Giant one in New Mexico, A GIANTER One coming on in New Mexico, two in Oregon, one coming up in Phoenix, etc., etc. Another fab is slated for Israel (in addition to their 6 in. Fab), and yet another is under construction in Oregon. I may have neglected a couple of 8 inch Fabs totally dedicated to R &D!
Sharp in Japan has an 8 inch FAB dedicated to Intel for Flash Memory Products.
And AMD investors keep touting this ONE FAB 25 in Austin. Oh, Please!
Let me tell you - AMD is like Sadam Hussein mouthing off and getting ready to fight the Mother Of All Battles against Intel. I can almost hope that CNN will televise this battle like they did the Gulf War.
AMD is so underpowered, it isn't even funny. The worst part is that they have little or no ammunition to put into their "guns". 100 MHz K5's anyone?
Place your bets, Dave.
It doesn't matter to me on whom you bet. I know where my investments lie.
Paul |
