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Technology Stocks : Intel Corporation (INTC)
INTC 48.80+5.0%3:59 PM EST
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To: Dennis who wrote (37196)10/21/1997 9:09:00 PM
From: Paul Engel  Read Replies (4) of 186894
 
Dennis - Re: " Report said intc will trade in the low 70's.
PE of 20. EPS of $3.50 !!!"

Who knows?

I have a crystal ball on order from AMD but they are having yield problems - so I can't help you just yet. Sanders promised me I'll get it "next quarter".

Intel will do OK for the next few quarters. They are "advertising" flat to slightly up sales/profits for Q4 and that has every analyst from her to eternity assuming Intel cannot increase their profits.

But -- Intel has already dramatically sliced their selling prices (ASPs) with only minimal damage to their earnings ($0.88/share).

As Intel converts more production to the 0.25 micron process - ramping in 4 fabs, according to Andy, et.al. - they will continue to drive down their costs. By mid-1998, I would expect half of their production to be at 0.25 micron. This should reduce their costs by 20% to 25%, overall.

Over this time period, Intel will also be driving the market to Pentium II devices (Desktops) and Tillamook (Notebooks), which will help maintain ASPs.

Somewhere around the middle of 1998, their cost reductions should start to be reflected in earnings growth. Then, the stock will respond positively.

And as you mentioned, MERCED will appear in the latter part of 1998/early 1999. This will reduce some R & D expenses and begin to generate addditional revenue.

Patience. This is a marathon - not a foot race.

Paul
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