Gary:
Excellent and thoughtful response. Delighted to arouse this type of rebuttal. You've more than held your own, and been a gentleman to boot. Between us, we'll have Intel lying here on the thread page like a dissected corpse. (g)
I'm not short Intel, (I suggest shorting only the "mortally wounded" in this mania), but I track it ferociously as it is an obvious bell-weather and a "darling". It's also at the base of a food chain I'm interested in.
The "half full" crack comes too close to home for an aging former jock who's not happy with the "filling out" process. (g)
My final comments and you get the final word. Promise.
I'll stick by my comments that 1998 will evidence minimal growth in global PC unit sales on a y-o-y basis, i.e. not much over 85-87 million units. I'll also stand with a prognosis of flat to down in 1999. Normally, I'd try to keep the discussion on revenues, which is what really counts, but the falling asp situation is a given in any event.
I haven't seen any evidence of that 12-15% growth, except for a forecast of several weeks ago, which had as its disclaimer, roughly the following (and this is not a fib);
-the above-noted figures include assumptions that Russia will respond to the IMF rescue package, that Asia is on the mend, and that Japan will rebound from its slump during the current year. It was fine print, but it wasn't there as the kind of humour that shows up in some other disclaimers I know of, although it sure made me laugh.. (g)
Incidentally, even if I bought the 12% to 15% number, that's quite a bit of "slipping" from the 30% to 35% numbers (and this was in revenues) of a few years ago.
We'll agree to disagree on Intel's growth prospects. Where it looks like we have differing opinions is on the company's dependence on PC unit growth. That's where they get hurt from my perspective. With no PC unit growth, INTC's revenue growth will be negative in 1999 unless they do what many companies do, which is "buy revenues" by acquiring companies.
Re. workstations; PCs are the big item. Workstation volumes relegate the gains (even on the much better margins) to the "mildly relevant' level for a while yet. Also, the high level PC's are not where the sales growth is occurring, it's at the bottom.
Re TK,...the flip was singed soles and burned toes inspired.
I'll make a note to come back and tease a bit (or eat humble crow) a few months from now re the semi bottom comment. It will be a year or two yet. There aren't enough chapter eleven procedures, nor mothballed plants to make a dent in the excess manufacturing problem yet.
M.I.S. and purchasing types that I talk to seem unanimous in opting for inexpensive, simple PCs in their future purchase thinking. "I don't want them playing internet games", is frequently heard. Capital budgets are under siege in any event.
The scientists at INTC say that the current technology carries them to .13 After that, according to them , its a new ball game and years away in any event. Cutting capital budget makes sense to me in a reduced sales environment. The big cash drain is the buyback program.
Cash is the toughest asset to acquire and the easiest to disburse on dumb pursuits. I hate to see companies buy their stock back at multiples of the price at which they sold it to the public in the first place. It will make more sense to buy it back at the bottom of a bear market than the top of an extended bull.
No error on Merced. The "miss" was announced just as AMD was pushing its way into "big five" acceptance. The gaff opened big doors.
No arguments with comments on AMD's inability to earn. A "given" long since.
Add-on
What do you think will be the market's response if and when it comes to appreciate that the new Celeron and its more expensive brethren are remarkably similar,....I'm a bit surprised at the analysts who have not yet talked about cannibalization nor about the P&G approach to marketing. (g)
That's me finished. I can hear the "finally's" from our friends even up here. (g)
Best, Earlie |
