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Technology Stocks : Apple Inc.

AAPL 272.24

+0.5%

Dec 23 3:59 PM EST

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To: Robert Mayo who wrote (4969)	9/13/1997 12:52:00 PM
From: Robert Salasidis	of 213177

Intel currently spends at least 2 billion $ on R&D - most of which goes into theiur uP. Intel also spends about 2x that on capital equipment to manufacture the chips. Assuming Mot/IBM have to spend the same amount on R&D to maintain the same performance level (or even if they have to spend half that amount), then that means they need to spend at least 1b$ in R&D as well to maintain the long term viability of their product. Because of the lower volume, capital costs should be less, but in order to maintain performance the chips need to be produced on leading edge products - therefore - at least 1 new 1b$ fab every 2 years or so - say 500mil$/yr. If Apple has about 5% market share of 100,000,000 computer a year, and MOT makes about 200$/chip, that ends up in MOT losing 500 mil$. With these assumptions MOT needs to make 300$/chip to break even. The end result is that either market share increases, prices go up while market share remains the same, or MOT bows out of the high end uP business - the embedded market would probably still be very viable.

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