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Technology Stocks : Intel Corporation (INTC)
INTC 49.50+1.4%10:00 AM EST
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To: Road Walker who wrote (99485)2/18/2000 10:25:00 PM
From: nihil  Read Replies (2) of 186894
 
Not a word of truth in the whole statement. In techology (i.e. economies of scale industry) the price is a decreasing function of scale, R&D, learning (supply side factors), and design wins and complementaries (demand side factors). With enough design wins on a chip the price can be brought down by 35% or more a year, but it is not the increased production in a single line that brings the price decline, but the multiplications of lines and fabs. Ramping up take times, if only because of the time cycle in production of chips that takes hundreds of procedures which have minimum times that add up to weeks or months. Premature price reductions (Intel in 99) and premature announcements (Intel in 99) create shortages which allow effective substitutes to make a bundle. The are simple the working of the dynamic law of supply and demand. One makes mistakes. Glitches occur. People stand in front of the steamroller waving red flags, but while dogs bark, the caravan advances crushing everything in it's way. Intel owes almost nothing. Has billions of cash and high priced stock. What it cannot make it can buy. $5 billion investment this year. A doubling of capacity. PC prices came down for two main reasons: (1) Dell's (and white box makers) destruction of CPQ, IBM etc. margins and profits. (2) economies of scale and technology in components and marketing of same. Any school boy can put together a cheaper computer than he can buy at CompUSA. How can a box maker compete with billions of school boys?
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