Re: the fact that Intel can manage to squeak out $2.7 billion this quarter should tell you something...
Hi Steve,
Yes, as I said, the earnings are beautiful. But a P/E is usually driven by growth (or decline). That's why bonds don't have a high P/E. Intel certainly will have better days eventually, but for many years they basically had no competition. This permitted them to maintain monopoly profits (in the legal, economic sense, not the illegal anti-trust sense).
By the time Intel gets its act together again, AMD will be sitting on billions in capital, several new state of the art FABs (don't forget to include FASL if you're comparing FAB counts), will have two independent design centers in place (Austin, Dresden), and will have a solid presence in the corporate market. It will never again be as easy for Intel as it has been in the past.
As long as Willamette performs as expected (I think it will do well) and can be manufactured without problems (not quite as sure a thing, but it will probably go OK) Intel will have something that can stand up to Mustang by Q1 of 2000. If Mustang has problems (It's hard to remember at this point, but once upon a time it was AMD that kept screwing up) Intel could do quite well at that time. Until then, keeping a chunk of your portfolio in Intel is fine, but if you're primarily or only holding Intel, it's time to diversify.
Regards,
Dan |
