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Technology Stocks : Intel Corporation (INTC)
INTC 35.94-5.1%3:59 PM EST
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To: Scumbria who wrote (66931)10/17/1998 3:55:00 PM
From: Fred Fahmy  Read Replies (3) of 186894
 
Sumbria,

<they have to sell parts at 25% below Intel to keep their customers.>

Why did they have to insist on staying 25% below Intel's pricing??? Why not 10%? They should have nibbled on the edge instead of taking a giant head-on. You're right, though, now it would be very hard to go back and offer less of a discount. AMD has shown repeatedly that they simply do not understand how to run a profitable business.

The tech company I work for is in the same position as AMD vs. Intel. We have been able to gain market share by offering better value not by pricing 25% below the giant in our industry. Had we used AMD's strategy we probably would have gotten similar results. Instead, growth has been outstanding, earnings have exceeded expectations consistently, and our stock has more than tripled since we IPO'd 3 years ago. Like AMD we had 0 brand recognition when we started a few years ago and like AMD we have much much less resources compared to the nearly unlimited resources of our industry leader (who has a great majority of the market share in our industry). There are very effective ways to compete against an industry giant and prosper. Unfortunately, AMD hasn't got a clue as to how to do this.

<Intel has forced AMD into their current pricing levels>

Explain exactly and specifically how Intel forced AMD to maintain a policy of pricing 25% below Intel.

FF
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