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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: patron_anejo_por_favor who wrote (4820)7/20/2000 4:05:09 PM
From: chic_hearne  Read Replies (1) of 436258
 
patron, nice call on bailing on the AMD at the end of yesterday. I'm paying the price now, I'm going to end up ahead by $20K or so for July options, but it should have been much higher. After a little digging through the financials, I noticed a telling stat. YoY for Q2, look at the operating profits (this is the "core" business, ie, processors):

AMD: + $400 million
INTC: + $88 million (less than 4% YoY)

Basically, Intel is growing slower than an "old economy" company. Investment gains are where the new profit is coming from, but they only have $.67 per share of unrealized gains left. At the current run rate, investment gains would run out Jan. 23 2001. This of course is assuming they can actually get the gains out of these flakey dot coms and companies like MU. As was pointed out in the AMD CC last night, Intel can't afford to get into a pricing war because the rest of their units lose $800 million a quarter. It's only going to get worse as AMD converts to .13um technology which will allow them to get twice as many dies per wafer over Intel. Intel is also not going to gain the top end back to make the big bucks. Taking all of this into account, Intel seems like a compelling short. Given the current valuation, it could tank BIG time and still be overvalued. Now might not be the time because the fall will be big, but with none of these big investment gains next year they will be seeing profits decline. FWIW
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