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Non-Tech : Any info about Iomega (IOM)?
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To: Sabrejet who wrote (24317)6/4/1997 10:57:00 PM
From: Fred Fahmy   of 58324
 
RICHARD,

<That's the difference in the multiples with companies such as INTC vs. MSFT. INTC has a niche product. Cyclical in nature.>

Boy where to start. I have never seen so many errors in such so few words.

Multiples: MSFT has a higher multiple because it doesn't have the captial requirements of INTC. ITNC must spend billions and billions of dollars on capacity each year. MSFT has no similar expense. There is a term referred to as 'shareholder value add' which is essentially the EPS discounted for the capital requirements. Many investors use this instead of pure EPS when comparing companies. When discounting for capital requirements, INTC is in the same ball bark as MSFT when it comes to valuations.

Niche products: On the contrary. A niche products implies a product with a small, specific, specialized target group of consumers. INTC's prodcuts are the opposite of a niche product. They are mainstream products with approximately 90% market share across all PC's.

Growth: Here is where you show a total lack of understanding of the semi industry. Your inability to seperate commodity (cyclical chips such as dram) and INTEL is not uncommon. Intel has grown earnings sequentially for 8 straight years. Where are the cycles??? In the most recent years, this sequential growth has accelerated. 1997 with be the ninth year of consecutive earings growth and will be approximately 50% higher than 1996. Hmmm....looks like a growth stock to me....and a damn impressive one at that. You can't possibly suggest that just because INTC does not grow sequentially one quarter every couple years that this defines a cyclical stock. I suggest you come to their home page and look at their annual report and look at the facts before referring to INTC as cyclical. This is simply incorrect but don't feel bad......it has taken WS many years to undertand this and many analysts still don't get it even today.

Finally, I strongly agree with you that KE's policy of not commenting is "top notch". To do otherwise, even once, only invites speculation now and in the future. By having a previously stated policy of not commenting, no one can read a "no comment" as a sign that something is brewing. If they did not have such a policy and history of this policy, then people might have reason to speculate.

FF
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