Gene,
<So do you expect a return to 32% CAGR? And do you think 1998 is just an aberration, or is it a change in the fundamentals of the PC industry?>
Don't know about 32%...I think that is a little high. I am and have been invested in Intel based on the assumption of a sustainable 20-25% CAGR. Of course this includes years like 1998 which I do think is mostly an aberration. Fundamentals of the PC industry are changing but I think long term it is for the better. More people using PC's be they cheap, middle, or high end, the better for Intel. As I have said many times, I believe that Intel's future growth will benefit tremendously from the high end. I see them becoming as dominant at the high end as they have been on the desktop for many years. Many applications which previously have been handled by mid range PC's (such as AS/400's) and even mainframes will be replaced by Intel CPU's or better yet multiple Intel CPU's. Demand for these high end applications will increase as more and more consumers have PC and are "connected". I see a future where virtually everyone banks via computers, shops via computers, researches via computers, entertains themselves via computers, communicates via computers, etc. In addition to requiring that everyone have a PC to participate (even a cheap one), the infrastructure to support such demands will not be comprised of cheap machines.
Finally, don't underestimate Asia's recovery or the rest of the world. Although Asia is now dormant, it will eventually wake up and it represents a huge opportunity when things get back on track. China will be very big for Intel. In most of the world the PC revolution hasn't even begun. Even Europe has tremendous potential beyond what we see today.
1998 has been a year of transition in the PC industry (including Intel) coupled with unfavorable macro-economics. Yet even under these conditions, Intel has performed admirably.
Good luck to all,
FF
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