Martin, I think the worst still may be in the future for Intel. It is high on Price to sales but reasonable of price to earnings. This is indicative of very high margins. And those are coming down a bit and will come down more.
The trick with this one is that Intel needs something to kick the customers back into high end pcs. Having just completed a shopping tour for a new pc, there was absolutely nothing a PII with max mhz. could do for me that my old Compaq with 120 Mhz pentium couldn't do (on the rare days when it was working). This isn't true for everyone. Games players can use the faster chips, but they still can do better with Nintendo and Playstation. Servers obviously need more and faster. And engineers can use any advance they get. There are also computer trendies who have to own the latest thing, even if it does little for them. However, I think these markets combined are small relative to the mass market consumer and business operator, and the sub-$1000, low margin chip can handle the work very well, thank you.
On the low side, not only does Intel have lower margins on these chips, it has viable competitors willing to engage in price wars.
There are two main problems with this co and some possible solutions. First is basic. This co. has not had a new idea in the mpc area for a decade. Everything has basically been an enhancement of the hoary X86 concept. Good stuff, to be true, but not likely to give Intel its previous growth rates. They have to start doing some research and development on the next thing, before somebody else beats them to it. And, secondly, if Win 98 or 99 or whatever is a must have, that will increase the sales of high end boxes. With none to test drive, I think the jury is still out on Win 98. However, MSFT doesn't seem to be touting it the way they touted Win 95 and No Tasks 4.0, which gives me some clue as to the radicality of the changes.
So, if you see something new out there, and it uses Intel chips, buy. But if you think they have to depend upon pc growth to push eps in the future, then this one is beginning tyo look like General Motors. MB |
