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Technology Stocks : Intel Corporation (INTC)

INTC 34.72

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Nov 17 3:59 PM EST

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To: James Howell who wrote (52109)	4/5/1998 11:06:00 AM
From: gnuman	Read Replies (1) of 186894

Re: Barrett predicts strong 2H sales. It would have been nice if Craig had qualified that statement. If you look at the roadmap, Intel plans to transition CPU's in desktops and notebooks to all new products in 2H. For high end desk-tops it's higher speed PII's with 100 MHz FSB, for the low end it's basically cacheless Celeron, and for notebooks it's mobile PII. Since the PC represents over 80% of revenues, this transition is critical. Market expectations are, rapidly declining prices in all PC segments, fueled by the steeper than normal learning curves on all PC components. It will be difficult to reverse this trend. High end PC's In Q3 you will be able to purchase a PII/333 66mHz FSB system for around $1300. A new PII/450 100FSB system, (shown as the replacement for Q1 PII/333), will sell for $2500-3000. (Note the system prices are taken from Intel's roadmap). Think about it, todays ~$2300 box is projected by Intel to sell for as low as $1200 in Q3! What percent of the market needs/wants the higher performance at double the price? (Those waiting to buy will be well rewarded in Q3). Low end PC's. For Q3 Intel is positioning cacheless Celeron/266 for the sub-0 market. It's shown as the replacement for P233. But there are a number of questions about Celeron performance and maker acceptance. Additionally, well equipped socket 7 boxes will be selling for less than $800 in Q3. (I think whether from Intel or the competition). Will Intel drop socket 7 or will the makers demand it? And if Intel drops it will that increase demand for the clone makers? Notebooks. In anticipation of mobile PII the makers are bombing the prices on Pentium units. No one wants to get caught with inventory. But again, this sets a new value point for the consumer. Is there enough value added in mobile PII to justify an increase in notebook ASP? The steep learning curves and rapid displacement of products must be causing some real headaches in the marketing department.

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