Tom, re: INTC. I decided personally to get out of the CPU market this spring due to anticipated price wars. Since then INTC is up some, AMD is down significantly, and CYRX is up quite a bit. But I still am not excited about that sector in general, and INTC in particular. My basic question is now that consumers are used to buying sub-$1000 computers, how is INTC ever again going to get consumers to pay $300-600 for a CPU? Can you name me any other consumer product that has seen significant price increases after the price came down? The only possibility I can see is Stereos where consumers have implemented surround sound. Thus it if INTC can make a huge change in functionality they may be able to add high end consumer sales at high prices, but I really don't expect this.
Given that INTC was selling CPUs for $400 that only cost $40 to make, I can't see how they can make up the difference on volume, either, because I don't think the consumer market is that elastic. Yes, they can expand other market segments like NICs, motherboards, graphic chips, SRAM, etc, and they are well run and will no doubt find ways to grow, but I just don't see the potential for the kind of share appreciation that we have seen the past few years. They will definitely sell MERCED well into the server and work-station market, but let's face it, the bulk of their profit comes from 80 million over-priced pentiums a year.
As for SPCT, the analysts aren't saying that the cellular infrastructure won't continue to grow (which would mean near-zero sales for SPCT, only replacements), but rather that the rate of increase in the infrastructure has peaked. In other words, they could just keep building at the current rate forever (which would imply constant sales for SPCT). Has the rate of increase peaked? I have no idea. But it isn't impossible. It is easy to project growth forever in the future, but it rarely happens that way. Heck, even WAL-MART is running out of places to put new stores.
I am just glad I decided that the whole market was dead meat and sold everything. Now I will just wait for things to bottom. Frankly I doubt this one will go too much lower, but it could go to 20. I will say that if the rate of cellular buildout has peaked, PWAV could be in for big trouble because last time I checked I think it had a P/S ratio 3 times as high.
Good luck to all SPCT holders,
Carl |
