thread..hot news on 3com
From San Francisco Chronical's .
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Is It Time to Take Cyrix Seriously as a Competitor to Intel?
Also, who's buying 3Com's stock, and more on C-Cube
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Herb Greenberg
The compelling part of the Intel story is its near-monopoly in the market for
high-performance chips for personal
computers. Neither Cyrix nor Advanced Micro Devices, the two most frequently
mentioned rivals, have provided
serious competition.
That could soon be changing. Analysts have increasingly been chatting up
Sunnyvale-based AMD over prospects
for its long-anticipated K-6 Pentium-like chip, which is expected sometime next
quarter.
But the sleeper could be Cyrix, which is headquartered in Richardson, Texas. This
morning Compaq is expected
to announce a new multifeatured, high-powered PC that sells for less than $1,000, and
uses the new Cyrix
MediaGX processor. ``This isn't a low-end chip,'' says Cyrix marketing VP Steve
Tobak. ``It compares
performance-wise with the Pentium.''
He adds that later this year Cyrix expects to roll out chips using technology equal to
Intel's new MMX. However,
because of the way Cyrix's chips are designed, Tobak claims his company's chips will
always be cheaper than
Intel's.
Donaldson, Lufkin & Jenrette analyst Krishna Shankar says that if Cyrix and AMD's
rollouts go as planned, the two
companies could capture as much as 30 percent of the chip market by the end of next
year, compared with about
10 percent today.
He adds, however, that Cyrix still has to prove that it can ramp up production of its
new chips. While the company
has good design engineers, ``they still have to execute successfully.''
In the meantime, Shankar says he expects Intel to continue positioning itself for
higher-end consumers. ``The PC
market is a lot like the car market,'' he says. ``You can buy a Chevy or a Cadillac.
Intel wants to be the Cadillac.
But for every Cadillac, you sell a thousand Chevys.''
SHORT POSITIONS
-- 3Com calamity: The real story behind the recent rout of Santa Clara-based 3Com's
stock isn't who sold (the
momentum-investing crowd), but who has been buying. Analyst Noel Lindsay, of the
DMG Technology Group,
says the buyers are the Silicon Valley in-crowd, including venture capitalists, CEOs
and other plugged-in
investors.
He calls this ``a historic buying opportunity'' for 3Com, comparing it to the time in
mid-1994 when growth concerns
caused Cisco stock to slump below $10 per share (adjusted for splits). Cisco closed
yesterday at $64.88.
As was the case with Cisco, he says, 3Com is hiring, has the right products that are
selling well, is positioned well
in the marketplace, has great distribution and a good name.
Lindsay, interestingly, was the first analyst to lower earnings estimates on 3Com a few
weeks ago. Other analysts
followed, and the company, which has a reputation for being pretty up front, made
matters worse by
acknowledging a temporary sales slowdown.
The stock, which had been as high as $80 in December, closed yesterday at $40.56.
``I was completely amazed how the market reacted,'' Lindsay says.
-- C-Cube calamity, update: The stock of Milpitas-based C-Cube Microsystems,
which traded as high as $70 last
year, slumped even lower yesterday, losing $1.50 to close at $25.25. The latest
decline occurred after longtime
C-Cube bull Elias Moosa of Robertson Stephens, citing competition, chopped his
1997 earnings forecast by 23
percent to $1.53 per share. Last year the company earned $1.60 per share.
Quipped Marc Cohodes of Rocker Partners in Larkspur, a vocal C-Cube critic:
``Only a month and a half into the
new year and analysts are already predicting a down year.''
C-Cube officials couldn't be reached.
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