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Technology Stocks : Intel Corporation (INTC)
INTC 34.50+2.6%Nov 21 9:30 AM EST
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To: Scumbria who wrote (67774)11/3/1998 10:50:00 PM
From: nihil  Read Replies (1) of 186894
 
RE: AMD and Intel Stock Price

Scumbria, I think you are very wrong. AMD is selling at 2275 x last quarter's earnings. This is a very ambitious multiple for such a debt laden stock to carry. I think if AMD doubles its earnings to $.02/share next quarter it will not so much fall as plummet to a reasonable multiple of 20, i.e. a price of $.40/share which would put it below liquidation. That will not do. To keep the price from falling, we need at least $2/yr and fast.It is possible if K-7 makes it.
Intel is in a completely different situation. It has made $133 million on its investment in MU in a couple of weeks. Cash is king. Wouldn't it be nice if AMD had some? Intel stockholders face the same choices any other stockholder faces -- if they don't like it, they can get out, but, unlike AMD, if they are long-term holders they can get out at a profit. Everyone knows that gross margins of 60 or 50% are a some-time thing, and no reasonable person expects them to persist. The amazing thing is that no competitor has been able to do much about it. AMD has been drawn into a border skirmish and it is losing all of its cash. It seems to winning the skirmish, but meanwhile, Intel is sweeping all before it unopposed on the big battlefields. Margins on Xeon are 90%, and on Celeron 40%. Intel has plenty of cash. AMD little. Everyone ready for the next campaign?
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