Dear Tony,>>>So, what's the story about your current, today's, this moment's opinion of Barrett? .........You have to let us in on your current thinking. The suspense is driving me nuts.<<<
I'll give it a shot.
I have seen Craig Barrett now on TV and this is my gut reaction and forecast - and how I am going to translate this into an investment strategy.
It is very much like when Joe DiMaggio and Ted Williams retired and they had Mickey Mantle and Carl Yastremski taking their places. You knew that no one could come along and eclipse either DiMaggio or Williams. In the same way, no one is going to eclipse Moore, Noyce, and or Grove.
But, Craig Barrett could turn out to be either another Mickey Mantle or a Bobby Murcer who replaced Mantle. There is no way you can really tell. (end of baseball metaphor).
Given what I have just said I hope I don't confuse you when I reverse myself again and tell you the following.
Given the current gloomy outlook - increased competition - lower ASP - and uncertain demand situation - and given the Intel road map laid out for the CEO, there is no one that I would want in the CEO position, at this time, than Craig Barrett. I would rather have him in that position than Andy Grove. I am absolutely certain that Craig Barrett is not going to let gross margins slip under 50% and net to less than 25%. He will do what he says he will do. I am also certain that he will consistently beat analysts earnings estimates and he will be tougher to take market share away from than even Andy Grove.
Having said that, I am going to bet that Intel stock will be at 125 one full year after Craig Barrett takes over. Using a very, very broad brush I'm predicting that he will maintain virtually 100% of the high end PC market with an ASP of $450 on fifty five million units. He will maintain 60 percent of the low end consumer market with an ASP of $200. He will turn in earnings of $5 per share and Wall Street will reward him with a PE of 25.
The transition to Merced in 1999 will be tougher than this transition to PII and slot 1. The transition will be slower than expected. But, Craig Barrett will suck it up and bring Intel through the tough transition and Intel will be stronger than ever going forward in the yr2k.
Bottom line - he is not going to eclipse Andy Grove - but as a minimum - he will be known as a great interim manager - beyond that - who knows.
That's enough from me (Sonny is getting really antsy by now). What do you think?
Mary
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