Monica, I want to congratulate you on your fine investment with Intel. Your investment in Intel 2 years ago was a correct decision. 2 years ago AMD was in no position to compete against Intel. Intel had introduced the Pentium to the market 6 months while AMD was scrambling to begin designing the K5. At that point AMD HAD NEVER design a CPU that decodes the X86 instructions. For AMD to get it to the market in 1-1.5yrs was an impossible mission, especially for the BEGINNER.
This time is different. K6 is designed by NEXGEN. NExGEN had already finished designing the 686 (now called the K6) and had 1st SILICON results by Dec. 1995, prior to AMD's acquisition. It took NEXGEN about 1 year to reconfigure the K6 to be Pentium pin compatible.
NEXGEN was a tiny design company that has very talented circuit designers. They were the FIRST COMPANY to offer a CPU comparable to the Pentium, the 586. The 586 at that time had superior performance to the Pentium at same clock speed. It (586) had large cache size and a dedicated bus for L2 cache. Unfortunately, the 586 chip was not pin compatible to the Pentium and Nexgen was unable to mass produce and market its product.
The KEY IDEA here is that NEXGEN had SUCCEEDED in building the core circuitry to decode the X86 software codes without "bugs". Nexgen engineers have EXTENSIVE EXPERIENCE designing X86 microprocessors.
The K6 is merely an extension of the 586. The K6 is the "Rolls Royce" of the Nexgen 586; more cache, more decoding units, more pipelines, and MMX. The K6 WILL WORK! It will be an awesome microprocessor built with the state of the art 5 metal layer IBM process.
People will buy the K6. It will beat Intel in terms of price/performance. The "top of the line" notebooks will come with the K6, fast, powerful, and running cool. Remember, notebook computers is the fastest growing sector in the PC business, outpaces the desktop by at least a factor of two.
How will Intel block AMD? There are 2 strategies. First strategy, Intel will come out with new products. Jan 8, Intel will roll out the Pentium with MMX. That won't beat the K6 in terms of performance, but it will be out a few months ahead of the K6. Intel would then try to beat AMD K6 to the market by rolling out the Kalamath 1 DAY ahead. But that is no good because insiders of OEMs say the Kalamath is no better than the Pentium Pro. The second strategy is to drop the price of Intel's product line. Dropping the price would mean the end of the 57%+ profit margin of Intel which would mean the end of the 100+ in Intel stock. For Intel to maintain the profit margin and at the same time dropping the price means Intel would have to go to 0.25 micron technology and 5 metal layers. Intel will get there by Q3 1997. But AMD will be there as well. In my opinion, the only way for Intel to continue to be on top is to SCRAP the Kalamath and introduce the MERCED by Q1-Q2 1997. But then the MERCED is only 11% completed on the drawing board! Hmm, no wonder all the CB, VP, D, and etc. of Intel are dumping their shares.
Intel stocks will do well until AMD makes announcements concerning the K6. By then you better get out of INTC. If you want to buy AMD, buy it when there are no NEWS or when the hypes have faded. Insiders always brief big institutional investors of upcoming news. This is why you see stocks move a few days prior to the big announcement. By then you have missed the big jump.
My crystal ball tells me that AMD will go up after the Q4 earning release.
Good Luck |
