[Intel] is currently at a competitive performance disadvantage - Paul should love that one
Regards
-Albert
09:30am EST 25-Jan-01 Needham & Co. (Dan K. Scovel (212) 705-0322) INTC MU SAGI
SEMICONDUCTOR INDUSTRY: CHIP SHOTS
January 25, 2001 Dan K. Scovel 212-705-0322
dscovel@needhamco.com
Semiconductor Industry: Chip Shots
Intel (INTC, $36.25 +0.88, Hold)
1Q: $0.21 on $7.4 billion. 2001: $0.97 on $32 billion. 2002: $1.19 on $38
billion.
Microprocessor Price Cuts: Expected by Intel next week across all
microprocessor offerings: Pentium 4s by 21%-23% to $440-$644, Pentium III Xeons
by 17% to $424, high-end Pentium IIIs by 30%-43% to $231-$268, Celerons by
21%-34% to $88-$112, mobile Pentium IIIs by 30%-33% to $268-$508, and mobile
Celerons by over 30% to $75-$123. Regular price cuts of this magnitude have not
been uncommon over the last few years. Nevertheless, this one feels a bit more
aggressive: it is the first time in recent history that we can recall the
entire offering being affected (Intel typically staggers segment price cuts by
model and market segment), PC market conditions are unusually soft, and we
believe the company is currently at a competitive performance disadvantage.
Insider Selling: The CEO has filed to sell 400,000 shares..
Micron Technology (MU, $44.88 +1.63, Buy, Target Price $45)
FY2Q01: $0.09 on $1.3 billion. FY01: $1.33 on $7 billion. FY02: $2.33 on
$11 billion.
Elipida 0.13-micron DRAMs: Elipida, the recently formed DRAM joint venture
between NEC and Hitachi, plans to launch 256-megabit DDR and synchronous DRAMs
in 0.13-micron process technology 3Q01 and 512-megabit devices by the end of the
year, according to EBN. If memory serves correct, Elipida is converting from
0.18-micron to 0.13-micron. While Micron likely has a competitive lead with
slightly over half of current manufacturing at 0.15-micron process technology,
we believe Elipida will remain cost competitive-assuming it executes to this
publicized plan. Our point is that DRAMs remain commodity offerings with a
handful of large, committed, and capable suppliers-and we are not convinced any
one of them has a significant and sustainable competitive cost advantage. Our
trading bias on MU remains negative due to limited DRAM market activity and
persistently anemic market pricing following recent share price strength.
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