Barry - Re: "I need a Paul Engel comment fix."
My "spin" is as follows -
Intel slashed CPU prices by 25% - 50% and incurred a 4% profit reduction - $0.92 to $0.88.
In so doing, AMD and Cyrix were forced to reduce ASP's of their chips and they reported losses. Fortunately for AMD, they had yield problems so they lost less than they otherwise would have had they shipped more devices at a loss/device.
Intel is making sure that AMD & Cyrix have reduced financial strength so that they cannot compete effectively with Intel in the future - in design, development, manufacturing and marketing. Intel's price cuts will keep them both on the edge of profitablility - not good news in a capital intensive business.
The minor reduction in earnings may be a modest price to pay for protecting their (Intel's) market share.
Other good news - Intel said that their 0.25 micron process is now ramping in 4 fabs - the second two weren't supposed to come on stream until early in 1998. This will permit Intel to get Tillamook CPUS into desktops and the Deschutes (0.25 micron) into Pentium II SEC units. The smaller die sizes will improve over all die per wafer, decreasing die costs, and eventually raising Intel's profit margins. My guess is that July, 1998 Intel's earnings will reflect these manufacturing efficiencies.
Grove also said that all fabs improved manufacturing and yield efficiencies - compare that to AMD's debacle.
Intel's flash business remains troubled - but it represents only about 4% or 5% of their overall business. At some point in 1998,their StrataFlash technology might help to revive that business.
In related news, Intel announced "details" of their IA-64 Merced project (64 bit CPU) at the Microprocessor Forum in San Jose last week. The concurrent testemonials of MERCED support from HP, DELL, Compaq, Tandem, Stratus, SCO, AST, IBM, etc. give a hint as to the future impact this will have on Intel's earnings. 1999/2000 could be a watershed year for Intel in this respect.
Intel also outlined their x86/IA 32 roadmap at the same forum - it looks impressive.
Further, AMD and CYRIX announced their new "projects" which will differ from Intel's, creating incompatibilities. This may prove quite harmful for both of them.
Interestingly, AMD, the Slot 1 basher, announced a similar SLOT A (A for Alpha) interface, telling the world that, yep, the Socket 7 is running out of gas.
As for Cigars, I found some Rico Havana Blend cigars that are really good - although I'm not sure if that is the generic name or the brand name. Either way, a great smoke for about $3.99!
Paul |
