RE: <<AMD other than watching them from a distance for their mediocre capacity to provide some lackluster competition to Intel in the microprocessor market.>>
INTC could be in a real Pickle.
What if AMD's Yields increase @ .25 Micron.
What if IBM agrees to produce 3-5 Million K6-7's / year.
Add that to AMD's 4-8 MM run rate, and you get almost 10 MM chips.
We know that IBM and CPQ like selling these lower prices machines.
Put those chips on PC 100 MotherB and suddenly you have quite a little performer
I think CPQ and IBM will have an easier time selling these less expensive machines than Covington machines. When all is said and done, the AMD box will cost less and out perform the INTC box in a general office application environment.
Intc is going to replace the P55C with Covington. I don't understand this move; maybe some one can explain it.
With all of the component improvements Cov will be faster than Pent, but AMD K's will have all of those component improvements also.
If, Big IF, INTC cuts back on Pent MMX and try's to replace that demand with the more expensive Covington, And AMD gets the added capacity, INTC could be looking at 85-90 million units (85-90 + 6-10=95-100 million PC in 1998) this year. Albeit at higher ASP. But INTC needs those units. Chip plants at less than 100% capacity are margin killers. This part is just for fun, say margins drop 2-5%, Rev's drop 5-8%, the stock gets killed, EPS drop, R&D and CapEx won't be jeopardized as that is where INTC excells. But INTC could see a quarter with big negative Comparisons in the second half of 1998. 2H 98 EPS recovery is the supposed reason that the stock is rallying now. In October you have a stock at a new high with 1 year of bad earnings and its most troubling competitor looking great. That spells potential disaster.
Wow, that was fun.
This or something like it has probably Ben posted a hundred times, but I just like going through it for fun.
Paul, I know you don't think this can happen so you don't have to tell me.
Jim |
