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Technology Stocks : Intel Corporation (INTC)

INTC 34.50

+2.6%

Nov 21 9:30 AM EST

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To: davesd who wrote (35760)	10/14/1997 11:41:00 PM
From: Fred Fahmy	of 186894

Dave, Intel's strategy (as stated in their annual reports) has never been to maximize margin percentages but rather total margin dollars. They have been saying for more than a year that they expect margin percentages to eventually return to their historical obscene levels of 50% plus or minus a few percent. The jump last year and this year to the 60% level was an exception. Intel has also made it clear that margins returning to the 50% level will not be due to CPU pricing pressures but rather to entering new lower margin businesses. Intel realizes that to grow the bottom line, they will have to continuing expanding into new businesses. It is unreasonable to expect new businesses to deliver the same type of margins. Intel will grow revenue by continuing to add new businesses as well as by taking advantage of PC growth. It is important to note that Intel stated that Q3 CPU ASP's were within the normal range. The slight earnings shortfall was due to pressures on flash memory. Re: PC sales slowdown I just don't see it now or in the forseeable future. I think annual PC sales will continue to grow at least 15-20% for as far as the eye can see. The global technology revolution is just beginning....nowhere near peaking. This is especially true in the non-US corporate world as well as the non-US home environment. Mobile PC growth rate is tremendous as are servers which run corporations and act as the infrastructure for a world wide network (i.e. the internet) who's potential hasn't even begun to be tapped. Perhaps there will be some slowdowns at times within the US retail channel for home use....or perhaps another segment here or there...but overall PC sales will continue to grow very nicely. My guess is that the worldwide PC growth over the next 5-10 will be greater than anything we have ever seen. Intel may be boring over the next 6 months, but over the next several years they will continue to dominate one of the most exciting and profitable segments of the technology revolution. Intel is the heart and soul of the global technology revolution which in turn is the heart of the global economy. Intel will dictate the future of computing which will include PII and Merced. There are very few companies, if any, that have no substitute. Intel is truly unique. If Intel went away tomorrow no one would be able to step in and meet the world's demand for the brains (CPU's) to keep the global economy/technology revolution functioning. Good luck to all, FF

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