Paul,
Here's the bear's opinion on INTC
First of all let me say that I'm a gloom and doomer (Dow 4500 and even lower within two years), and I believe that
YHOO, AOL, DELL and even the great MSFT would take a much greater hit then INTC.
But in the last month it was the manufacturing techs that were hit - KLIC, SEG, MU - and not the sw cos.
Intel is a great company, but one that clearly cannot show
double digit growth in the coming Qs.
1. Price per unit:
Since 80286, 14 years ago, and until 2 years ago, the ppu of the
high end chip was in a slow ascending trend from $300 to $450,
and the previous generation cost was steady around $120.
In Dec '95, retail price of 486DX4 100 was $110, and the high end P-120 was $480 (P-133 just became available).
In Dec '97 the P-MMX166 sells (retail) for $170 and the PII-266 for $700
(PII-300 is almost 1k)
Other components of the PC were on steady or slightly declining price trend. The 40MB HDD of 1986 cost almost the same as 400MB of 1993 and 3GB HDD of today.
On the average, a high end (home) PC cost was on a slow decline until 3-4 years ago (from $2200 to $1600) and then steady.
While ignoring the improvement in each component (CPU, HDD, RAM),
one should not discount the fact that there are more components to today's PC- CD, modem and sound card are standard in a home machine today, unlike 10 years ago.
Thus, the %age of CPU price in the home PC has risen steadily from 8% to 12% lower end and from 25% to 30% high end. This cannot continue. The $400+ chips just won't do in a home machine, cause the costumer can reduce the cost SIGNIFICALLY by choosing a lesser CPU. Buying MMX driven machine instead of P-II cuts 20% off the top!
And what use do you have for a P-II at home that the MMX cannot do?
In two-three years we'll be using NT at home, and be needing the P-II, but then it would be a <$200 chip.
The current use for P-II is for NT (server) bussiness machines.
Growth of this sector is much more dependent on the economic
environment then home machines. One can predict that multiple CPU servers would boom, which would be great news for Intel, but how can one predict that?
2. Unit sales
Wow, this is already very long.
Some other time then.
In conclusion, I see no reason for INTC to reach $80 in the next 6 months. Q4 IMO would be 86c-90c, 92c if the servers market is that good.
If there's no stock market crash early next year (i believe there would be one) then INTC can resume upward trend as early as April '98.
T.A. suggests more downside short term.
ATG |
