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Politics : Formerly About Advanced Micro Devices
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To: tejek who wrote (108260)4/28/2000 2:18:00 PM
From: pgerassi  Read Replies (1) of 1575424
 
Dear tejek:

Intel will be even more badly hurt in the stock price. If price war in high performance segment happens, Intel will have to lower prices of its CPUs by 50%. This will cause their ASP to drop to less than 80 to 90. At those prices, Intel will lose .5 to 1.5 Billion a quarter. At those rates, what would their stock price be? I would say around $5 to $10. AMD would have the same ASP and may lose $75 Million remembering the long term Flash contracts. Thus AMD stock price would be about $12 to $16 about where it was last year.

Intel could outproduce AMD, but that would not result in the same price reductions since AMD's ASP would tend towards Intel's ASP. Intel's ASP would shrink to AMD's ASP. AMD has shown that it makes money at this ASP. Intel will lose money BIG TIME at AMD's current ASP.

Thus the price war is no longer in Intel's best interest.

Pete
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