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Technology Stocks : LSI Corporation
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To: Tony Viola who wrote (19355)7/19/1999 4:59:00 PM
From: shane forbes  Read Replies (1) of 25814
 
"So when's the bubble burst? If chips for the internet are the greatest thing since
sliced bread, how soon before a bully breaks into the bakery, like Intel? Oops,
have"

Intel will have an even slimmer chance of being awarded those kinds of valuations - again for 'obvious' reasons. When Intel who is upto to 25 billion in revenues goes after markets with 200-400 million in revenues [a measly 1% of their current revenues] and also pays what looks like very high rates for businesses that are not quite upto par, you know Intel's hand is being forced and it isn't because the 22 billion that they get from their 'core' businesses is coming up pretty. Something fishy in Denmark - they've outgrown their market. Oops, trouble.

BTW this is not quite as easy as MSFT's 'free' Internet Explorer scam as these are not a unified market and the market size of the segments is much smaller. [The right analogy would be if someone invented a snazzy MPU and everyone started buying that instead of Intels'.]

In the final analysis for a company of their size Intel has to cover monster fixed costs (which MSFT does not BTW) and they can't do very easily. Either they need to become another GE or start doing a low capital intensive biz - neither of which is too likely but the former is more so than the latter. At the same time they have to destroy AMD and anyone else who comes up.

So the valuations become:
smaller companies in bubble > smaller companies > LSI > INTC

As to when the bubble bursts that's chaos theory - but the signs will be there and are there in some cases. However each person has to sell according to their criteria so I am mum.
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