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Technology Stocks : Intel Corporation (INTC)

INTC 40.56

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To: Paul Engel who wrote (57505)	6/8/1998 3:22:00 PM
From: gnuman	Read Replies (1) of 186894

Paul E. re: "The key issue is the COST of CPU production. If AMD and Cyrix can produce CPUs for $25 to $35 and sell them for $80 to $100, they can make money. Currently, they can't do this." An interesting, authorative statement. Apparently you are aware of their business plan. What is the volume of units sold that makes this happen? What is their COGS, burdened overhead, GSA, etc.? The ability to make a profit is very volume sensitive. The GM required to make a profit is inversely proportional to the volume of units sold. A lot of companies have intentionally suffered initial losses while buying market share, resulting in future profits. It happens all the time in commodity businesses. A dicey game, but many have pulled it off. I'm not saying that I believe AMD will pull it off, but it appears to be their game. Unfortunately for Intel, this apparent strategy is also impacting Intel's bottom line.

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