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To: cheryl williamson who wrote (18199)	7/26/1999 6:22:00 PM
From: Tony Viola	Read Replies (1) \| Respond to of 64865

Cheryl, INTC's gross margins for their low-cost processors are about 1/30 that of their Pentiums. Excuse me for butting in, but Intel doesn't disclose gross margins by product type. Also, to make it difficult for sayers to conclude the kinds of things you are concluding, they don't disclose what percentage each product type makes up of their total sales. As the market moves to lower-cost PC's, that means an increasing percentage of PC's sold will use the lower-margin processors, thus lowering PROFITS for PC makers That's why CPQ is selling for about 1/2 the price it was last year, and why DELL stock hasn't gone anywhere and is still stuck in the low 40's. What about Gateway and HP? techstocks.com About CPQ, it's problems beyond PCs are too numerous to mention, but DEC and Tandem are a good start. Dell's P/E was ridiculous, probably still is. The PC market is definitely not an easy place to make money, I agree. I just couldn't let that Intel "factoid" go unchallenged. Tony

To: cheryl williamson who wrote (18199)	7/26/1999 6:42:00 PM
From: Stormweaver	Read Replies (2) \| Respond to of 64865

Cheryl, you don't get it. I could care less if PC maker's margins are shrinking. I was refuting the point you made earlier, do you remember saying this... Good Luck. You're gonna need it. The computer business is not a cyclical industry. We're witnessing an historic shift away from PC's. Mike Dell is just whistlin' dixie. High P/E's are just a vote of confidence in the company from the market and as long as the earnings keep rolling in it will stay high. or for the link... Message 10223692 Regardless of eroding margins, PC's are selling like hotcakes. This means more PC's and more demand for the most popular PC desktop OS - MSFT and it's office suite ;) /James

To: cheryl williamson who wrote (18199)	7/26/1999 9:07:00 PM
From: Rusty Johnson	Read Replies (1) \| Respond to of 64865

New TurboLinux Release Number One OS in Japan Outsells Windows 98, Macintosh OS and Other Linux Packages in Retail Stores biz.yahoo.com Thanks to slashdot.org

To: cheryl williamson who wrote (18199)	7/26/1999 11:10:00 PM
From: Rusty Johnson	Respond to of 64865

PC sales grow By Om Malik Forbes Digital Tool forbes.com NEW YORK. 02:45 PM EDT— Personal computer sales grew a whopping 25% in the second quarter, a strong performance that can be squarely attributed to hefty consumer demand, according to data released by research companies International Data Corp. (IDC) and Dataquest. Framingham, Mass.-based IDC reports that global PC shipments rose 27% to 25.6 million units from a year earlier, while San Jose, Calif.-based Dataquest is reporting growth of 26%. The two firms use divergent methods to collect data, which would explain the variance in figures. These numbers however don't tell the whole story. For example, strong sales are coming from ultra-cheap computers, which sell for less than $600 a piece; and it is not consumers, but rather the so-called Free-PC companies that are driving up demand. More telling is the conclusion from PC Data, a Reston, Va.-based market research firm, that a surge in ISP rebates and free offers in late June was largely responsible for the 35.4% unit increase over June 1998 figures, according to its July 26 report. "PC sales surged in June, propelled by the extensive ISP rebate programs offered at most major retailers and mail-order firms at the end of the month," said Stephen Baker, director of hardware analysis at PC Data, in a statement. Strong demand of PCs not withstanding, the average price of a PC has hit its lowest level ever--$890 in June 1999, which compares to the $1,200 being charged a year earlier. The reason prices have skidded so much is because the only PC that remains in demand costs less than $499 a piece. According to PC Data, sales of PCs priced below $600 were key drivers, with unit sales increasing more than 800% and representing more than 26% of PC sales during June. With prices declining this rapidly, it is quite clear that making money in the PC business will not be easy. Even before these rapid price declines, we saw the earnings and sales of PC component makers like Western Digital (nyse: WDC) and Maxtor (nasdaq: MXTR) come under pressure. Even a giant like Intel Corp. (nasdaq: INTC) is not immune to this malignancy. In the second quarter of 1999, Intel reported that its sales were down 5% from revenue of $7.1 billion in the previous quarter. Intel blames the "seasonal slowdown" for this decline. However, when compared to sales in the fourth quarter of 1998 ($7.6 billion), Intel's top line has shrunk by $868 million dollars. For the first six months of 1998, the top line growth shrank only $580 million. Until two years ago, Intel's revenues normally increased over the first six-month period. Why have Intel's revenues slowed? Its pretty simple--budget PCs, which use low cost Celeron processors, are selling like hotcakes, and power monsters running on the more expensive Pentium III chips are not currying too much favor with consumers. In order to win back market share from Advanced Micro Devices (nyse: AMD), Intel has been aggressively cutting prices on all its processors. The sharp declines in prices has led to a decline in the average selling price of the company's microprocessors. In the processor wars, Intel continued to regain lost territory in June, with its market share rising to 59.1% of sales, up from only 44% in February and 55.6% in May, according to PC Data. In the budget PC category, Celeron-based PCs accounted for 34% of unit sales in June 1999, more than double the market share of Celeron PCs in February. Pricing made a significant difference as Celeron-equiped PCs fell by more than $100 during this time frame, from $892 in February to $789 in June. Will these price declines prove to be time bombs when Intel reports third-quarter earnings? Only time will tell, but one thing is clear: what is good for the consumers is not necessarily good for the companies.