Amy: re a whole bunch of things
I appreciate you taking the time to respond, but am frustrated that many of your responses were nebulous:
- you don't state what the point of the acquisition was, just that several writers may have missed the point;
- you state that the reverse of the Motorola effect could be true and that the analogy doesn't seem to contain information relevant to Intel, but don't really explain why you feel that way and just state your belief that Intel will be undervalued;
- you cite the Xerox example, but that was made in a different context in a different post (and I certainly did not mean to infer in that other post that Intel the company is like Polaroid, Avon or Xerox, but just that investors can adopt the same attitude; personally, I feel that Intel is more like IBM or DEC than those non-technology companies - but "more like" still does not equate to "same as");
- you agree about Intel's large size, but believe that I could re-examine the size of Intel's opportunities without offering any data that would support a belief of greater size (with LEVL and Dialogic, Intel could be a $35 billion company next year, so a 20% growth rate would require $7 billion in incremental revenues [which is equal to my revenue estimates for 2000 for Actel, Altera, Analog Devices, Atmel, Cypress, IDT and Lattice combined and twice the combined calendar 2000 revenues for 14 non-LEVL communications semiconductor makers covered by my colleague David Wong]);
- you state that you do not share my implied negative opinion of Intel in the area of communications component provider, but don't offer reasons why Intel should enjoy the same extraordinary levels of profitability in these markets when the dynamics are so dramatically different (to wit, the absence of an X86-type standard leading to quasi-monopoly pricing power);
- you confirm that I don't see the appeal in Dialogic, but don't make a case for the acquisition; and
- you state that in a bull market, the risk is ignoring opportunities when my point was that a bull market takes prices to levels where the likely future earnings stream doesn't have the proverbial snowball's chance of justifying the incremental stock price appreciation necessary to create a return on "investment" (I'm afraid that all you've done is repackage The Greater Fool Theory).
I'm trying hard not to base my Intel outlook on the historical things you cited (Asian recession, Merced delay which indirectly may have exposed Intel temporarily to shifts in desktop market, not Server). In fact, the Asian recession last year sets the stage for artificially hyped growth this year, so that strikes me as a wash. I don't focus on the Merced that much; it seems to me that x86-based servers picking up share from Sun and other RISC-based machines is a much, much bigger story - but then even that leads to the question of sustainability (there's only so much share to gain from Sun, and if AMD does in fact come up with a viable alternative in the server segment, that growth will have to be shared).
My ratings are based on a 12-month horizon and utilize an estimated long-term (i.e., 5-year) EPS growth rate.
Thanks for rising above the "you're a jerk" response that often shows up when someone has a disagreement. I'd be interested in some of the detailed thinking behind your stances, and hope that you'll share them. - Tad LaFountain |
