Wow - You argue that Intel can't keep going up because,
well, it just can't. That is the boiled down argument
you make. They are selling for about 17 times next
years earnings. Microsoft sells for about 30 times
next years earnings, Cisco sells for about 40 times
next years earnings and Netscape sells for a gazillion
times next years earnings. The real question is as
follows; Will Intel grow? Let's look.
Is their product in demand?
Is their financial picture strong?
Is the demand growing?
Are their margins good?
Are their margins growing?
Are there announced competitors business competent?
Is Intel well managed?
Is the world of computers, networks, communications
and information moving from academia to business to
homes at an INCREASING rate?
Are they continuing to innovate?
Are they currently near capacity limited?
The only question with a no answer is the one about
competitors!
Yes, it is very likely that they will be the largest
company in the US in a very few years because, by
a fascinating combination of skill, luck, IBM bungling
and sheer management fanaticism, they are dominating the
most significant development in industry in the past
20 years - namely the microprocessor.
The problem with
defeating them is the size of the bet you have to place
to compete. You have to design a better mousetrap.
Unfortunately, it better be 100% compatible with Intel's
mousetrap or there's no software to run on your device.
I have a PhD in Electrical Engineering and I worked for a
number of years designing devices that had to emulate perfectly
the performance of competitive products. That was night-
marishly difficult in a product world with 1/1000 the
complexity of todays microprocessors. So you have to have
perfect compatibility, access to or ownership ofworld class semi
manufacturing capacity, risk a ton of money and oh, by the
way, if you miss your market window by say 6 months, the bar
has been raised so much higher that your product doesn't even
raise any eyebrows. For reference material on the wonderful
world of beating intel at their own game, check out the
history of NexGen, Cyrix and AMD and even NEC in the early years.
The American historian
George Santayana said that he who does not learn from history
is compelled to relive it. You never know and some team of
dedicated computer gurus may be designing the Intel killer
as we speak but wow are they ever facing long odds.
Good investing
Burt |
