Re: Dan, those are not the costs for Intel to make microprocessors. Those are the costs that Intel made to turn one of the worlds largest companies around 90 degrees to cope with a changing economy. A very large portion of this includes stock buyback, acquisitions, ramping of fab capacity, and R&D.
To suggest that this is what Intel invests in the cost of their chips shows how misleading to try to represent yourself. Care to justify yourself on this, or should I just assume it's due to ignorance?
Do you have more than a vague idea of what Intel really is? Yes, they'd like to diversify - No, so far they haven't really done so.
Three Months Ended Nine Months Ended
Sept. 29, Sept. 30, Sept. 29, Sept. 30,
2001 2000 2001 2000
Intel Architecture Group:
Revenues $ 5,393 $ 7,039 $ 15,653 $ 20,450
Operating profit $ 1,328 $ 3,347 $ 4,436 $ 9,292
Intel Communications Group:
Revenues $ 580 $ 948 $ 1,990 $ 2,559
Operating profit (loss) $ (218) $ 102 $ (606) $ 252
Wireless Communications and
Computing Group:
Revenues $ 509 $ 667 $ 1,714 $ 1,850
Operating profit (loss) $ (59) $ 149 $ (236) $ 447
All other:
Revenues $ 63 $ 77 $ 199 $ 165
Operating loss $ (662) $ (741) $ (2,346) $ (2,172)
Total:
Revenues $ 6,545 $ 8,731 $ 19,556 $ 25,024
Operating profit $ 389 $ 2,857 $ 1,248 $ 7,819
Oh, and don't forget that, despite the so-called "stock buybacks" the number of shares outstanding actually rose because more shares were sold than "bought back" (many at subsidized prices to employees, I'd imagine) - did you include the revenue raised by those sales when reviewing the cost of buying the shares? How about the cost of subsidizing the sales to employees?
Look, I'm trying to not be a jerk about all this, but the main thing Intel has going for it, right now, is momentum. Like what kept Wang making money for quite a while. While it's great that they've continued to get twice the price for an inferior product, that sort of scam generally doesn't last forever, and the clock continues to tick.
Their main (only?) competitor has been gaining market share in Intel's main market (desktop PCs), has re-entered their No. 2 market (notebook PCs), and has entered their No. 3 market (SMP Workstations and Servers).
Over the past year, we've seen what Intel has been working on for the past 5 to 8 years, all released in a period of about 18 months. P4, the Rambus platform, and Itanium. P4 (so far, at least) is mediocre in performance and expensive to FAB, the Rambus platform has been an unmitigated disaster in every way, and Itanium is treading water, at best. It's going to be years before they have any major new initiatives coming to fruition - this is it, we've seen their cards, and just aren't very impressive.
The stock has been valued on the basis of their being able to make monopoly profits because they'll kill off AMD. Well, they don't appear to stand a chance of that, now. Intel will hold a big chunk of the CPU market for the foreseeable future, but their costs are very high, and their competition seems to be getting tougher and tougher. Like General Motors in the 70's, Intel has huge accumulated resources, and market momentum that will carry them for a long time, but they're probably going to start losing money soon (depending on the accounting used, it's already begun) and that situation doesn't look like it will end for years. |
