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Technology Stocks : Intel Corporation (INTC)

INTC 50.59

+4.9%

Feb 6 9:30 AM EST

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To: Paul Chiu who wrote (1633)	6/4/1996 2:28:00 PM
From: Richard Rutenberg	of 186894

WHY INEL CANT EXPAND ITS MARKET As an Intel reseller I think I should point out the obvious: 1] Intel faces a lot of competition. Intel Inside is great marketing... or could it be an industry joke again? 2] Intel sells other products hoping to grow the industry- and make it need faster CPUs- this is their focus 3] Intel needs people to invest in "new" technologies to drive the demand for chips, otherwise why upgrade? 4] A great deal of telecom companies revenues come from selling business services- ie dedicated lines/switched digital services, etc. They will not provide a cheaper product unless forced to by competition (eg cable carriers) [not likely anytime very soon]. 5] Computer connections over analog lines will not exceed 64kb/sec for quite some time. Digital switched service pricing will not be reduced enough to make business customers change connection methods to save money on the reoccuring charges. 6] Intel is counting on teleconferencing and internet video to grow the market. The H.322 standard for video over POTS (analog modems) gives you a 1 inch square picture. Perhaps 12 year old kids won't mind watching this stuff... I don't think people will even bother watching sex in a window that small... GOOD LUCK INTEL! 7] To increase the size of the window, you need to use compression or a bigger pipe. Intel's plan is to sell faster CPUs to do the compression. I personally think that the market for live-video will be small and the market for play-back stored video much larger. This does require a fast CPU(s) to do the MPEG compression... how many of these boxes do you really think they'll sell? Wouldn't you rather buy an application specific integraded circuit to do this job? 8] Intel spends too much money (in my opinion) on fed-x, worthless dealer promotions, advertising, and excessive staff. They have pissed off many of the resellers by shipping buggy product, and dumping products when they are not profitable- for example, in January a bug was discovered in their Storage Express subsystem ($6-15K tape backup system) that stopped it from backing up. It was determined the bug was that they forgot about 1996 being leap year. Good testing. Sure, they shipped an upgrade, but at the price of the product this problem was inexcuseable. Perhaps Intel's plan is to let the competition find the bugs for them? Performance of this stock is far below the industry. Look at Cisco if you want to see how to run a computer company right. While I believe them to be a great company, the competition will find the next chip bug. They are too focused on damage control and not focused enough on finding out what the dealers and end users really want. I bet Andy Grove would like to call me to find out what there doing wrong... he can. This up trend won't hold up. Take your profits while you can.

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