Re Kurlak:
Merrill Lynch analyst Thomas Kurlak said on Friday he sees a
pronounced oversupply of microprocessors, with the personal computer market expected to grow by about 14-15 percent in 1998 and 1999.
-- Specifically, Intel Corp. now has the capacity to make more microprocessors than the market needs, he said.
So what is new. If I am not mistaken, except for one period a year or so ago when Intel announced that they were operating at capacity and sales were thus limited, when has this not been the case? By the way, Intel's earnings during that period were at their highest levels (so far). Nothing wrong with that.
''Accordingly, it (Intel) has begun to lay off workers, reduce capital spending and has delayed a major new fab in Texas,'' Kurlak said.
I think this is partially untrue and a misconstruing of what Intel said. Intel never said that they are "layiing off workers." They said that they are cutting back on employment by attrition - not replacing workers who leave. This is not Kurlak's interpretation and consequently one can see the bias in his remarks by the way he chooses to report what they actually said.
-- Intel to start transitioning its microprocessor capacity from mostly 0.35 micron to all 0.25 micron by late this year. Because of the smaller die size offered by this process, potential unit capacity will increase by about 50 percent, assuming four fabs are fully operational on 0.25 micron and comparable yields, he said.
-- ''Clearly, the slower growing PC market cannot absorb that level of increase in supply,'' Kurlak said.
-- Over the past year, Intel's average microprocessor prices are estimated to have declined 22 percent, he said.
-- A 50 percent potential supply increase can only worsen the pricing picture, he said.
Does Kurlak then go on to discuss what moving to .25 micron and the resultant capacity increases does to costs? Nope. He only offers a price comment.
-- At the same time Intel is moving to smaller die sizes, Advanced Micro Devices (AMD - news) is ramping up its long delayed K-6 chip. In addition, International Business Machines Corp. (IBM - news)
will add its K-6 supply to the market as an AMD foundry starting in Q4. ''Together we estimate K-6 production will exceed 12 million units this year and 21 million in 1999 compared to total AMD microprocessor units of 7.5 million shipped in 1997,'' Kurlak said.
Does Kurlak point out that neither of them are making any money at this? Nope.
-- Kurlak sees cutbacks or DRAM style microprocessor price war.
-- ''Even something less, which looks unavoidable, would be detrimental to microprocessor producers' sales and income levels,'' he said.
Seems to me that what Kurlak calls a "microprocessor price war" is a description of what we have been seening in pricing for years now. When was the last time anyone saw a price increase?
Kurlak's theme is one-sided and biased.
I agree with Ibexx's oft stated comments about the agendas that the Kurlakian employees of the major brokerage houses operate under.
Barry |
