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Technology Stocks : Intel Corporation (INTC)

INTC 47.76

+1.3%

10:17 AM EST

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To: Anthony Mascarenhas who wrote (5357)	11/17/1996 6:48:00 PM
From: Mark Brophy	of 186894

Re: K6 vs. PPro AMD has released the figures you asked for: <<A rough gauge of how the K6 would do in the marketplace would be to compare how the K5 has fared so far. Up until now it hasn't done much even though AMD has claimed it to be superior to the pentium.>> They sold 250,000 in Q2 and 500,000 in Q3. They expect to sell 1m in Q4. This is quite good when you consider that Cyrix has a better chip. <<On the discussion regarding AMD's K6 and Pentium Pro I think that Paul's post earlier discussed it quite well. Intel has a large lead in manufacturing capacity and technology which makes it extremely difficult for AMD or CYRIX to overcome especially since the cost of building a single FAB is in the order of $1.5B - $2B. >> I don't believe even the most optimistic fan of Cyrix or AMD would claim that they're planning to overtake Intel. I think the issue that probably should be discussed is the relative merits of each stock as an investment. Almost everyone already knows Intel is the best company, but that's already reflected in the stock price. Here's a comparison of a few chip stocks: Stock Price Cash/share Book/share Price/Book AMD 24 3/4 2.66 14.97 1.7 Cyrix 20 3/4 2.89 6.53 3.2 DEC 33 1/4 13.22 22.59 1.5 IBM 136 7/8 13.42 40.95 3.3 Intel 119 7/8 6.58 16.91 7.1 LSI Logic 31 1/2 5.01 8.96 3.5 TI 55 3/8 3.57 21.45 2.6 As investors, it's our job to determine which of the above stocks has the most upward potential. Intel has the highest premium over book value, which reflects the highest value of their intellectual property, brand name, and other factors that don't show up in the book value calculation. But, is it really worth that much? Is it worth 2x LSI Logic? Is it worth 4x AMD? Given the prospects of each company, I'd say that AMD has the most immediate potential for large appreciation. In the long term, DEC will probably do well after WinNT is used widely.

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