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Technology Stocks : Intel Corporation (INTC)

INTC 46.49

-3.6%

3:59 PM EST

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To: Brian Hutcheson who wrote (5278)	11/16/1996 9:40:00 AM
From: Fred Fahmy	of 186894

Brian, The problem with comments like those of Pfeifer is that they sound like a bluff to me. No doubt they would love to use AMD or Cyrix as leverage against Intel. Whether they would really "use them" in bulk depends on what their customers ask for. I bet that if their customers insisted on Intel they would be very reluctant to switch. BTW, I believe that the pie is big enough for all three (Intel, AMD, and Cyrx). I just think that Intel will continue to dominate and that AMD and Cyrx will fight each other for the crumbs left behind by Intel. The relationship between Compaq and Intel is sort of like a love hate relationship. It's like HP and Canon. HP is constantly fighting and bad mouthing Canon yet they don't dare switch to another source for their laser printers. There have been rumors in the industry for years that HP was going to dump Canon as their supplier....but it never happens. I guess they just don't want to take a chance on ruining a mutually profitable business. I think over the long run Intel will lose some market share and feel some pressure on their obscene margins. I just think these losses and pressures will be well managed and minimized by continued marketing/adverstising and reducing costs. People want Intel. They have had choices before. AMD based 486 systems were cheaper than comparable Intel machines yet Intel's loyalty held up very well. The question isn't whether AMD and CYRX can convince any tier 1 vendors to use their chips, it whether they can convince end users that it is just as safe and good to use their chips. They are going to have a very hard time fighting Intel's hughe advertising budget. Remember perception is often more powerful than reality. Things like CYRX's well documented overheating problem don't help the situation. Finally, any serious competition to Intel is going to have to have excellent management and well thought out strategies. So far, AMD and CYRX have shown me that they have neither. FF

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