Dear Amy:
If P4 is a disaster, for example, only even with a P3 at 75% of the P4's clock rate or an Athlon at 70% of the clock rate, then all of Intel's processors would be slower than Tbird and the Mustang derivatives. Sledgehammer would then be much faster than anything Intel has and they would lose the high end, middle, and upper low end to AMD. In 2002, AMD could supply 50% of the market for CPU's. Thus Intel must have a unit volume lower than that. That is saying that Intel would be 2nd fiddle (or an ex champion) using units (which is the more difficult to do. Revenue in CPU's would be below 50% for Intel much sooner (perhaps at the end of 2001). In either case, Intel would be down to below $100 ASP for its CPUs and that would cause Intel to lose 3.5 billion a quarter (or more) in revenue. This is far higher than its profits for operations and thus 1 billion or more in cash. Add to that the increased capital spending and loss of Investment returns, and you get losses per quarter at more than 2 billion dollars. Granted, the board would fire current management and cut costs wherever possible to stem the red ink.
Granted, this assumes that Intel and AMD maintain current trends (Intel misfiring and AMD executing perfectly). That is not a fantasy, just projecting from current trends. Intel has some big challenges ahead of it, P4 must be a success, 0.13 copper must go without a hitch and faster than Intel has performed switchovers before, McKinley better be a barn burner, and Intel may still require an AMD stumble even then.
All in all the next two or three quarters are going to be interesting for sure.
Pete |
