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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Uncle Frank who wrote (4780)	8/10/1999 6:09:00 PM
From: DownSouth	Respond to of 54805

It does cheer me up, tremendously. My evolving investment strategy is proving to be effective. What's ironic is that MSFT and CSCO are my oldest holdings, so my evolution is toward what I already "felt", years ago. The strength of the market at the end of trading today was remarkable. What the heck happened, reckon?

To: Uncle Frank who wrote (4780)	8/10/1999 9:22:00 PM
From: Tom Ardnij	Read Replies (1) \| Respond to of 54805

I got out of Intel in the spring of 1998 as it appeared that the company was caught flat footed on the low priced chip market. It appeared to be a dead investment. At the time AOL and Dell seemed like the place to be. I'm getting back into it now though. I think it is noteworthy that both IDT and NEC/Cyrix have given up the ghost of competing with Intel. The company has won the low cost battle with AMD with it's newly designed Celerons. It's apparent that the move to low cost internet access is really going to boost PC shipments. Check out it's low P/E relative to other gorillas. I know it's not exactly an original idea to invest in a genuine silverback, but Intel sure looks good right now. See following piece from Salomon Smith Barney. Accelerating unit shipments should help in several ways, and in fact, may give the company has a chance to break into record gross margins of 65% in the next several quarters: 1) Operating leverage. Acceleration of unit shipments on a fixed cost basis generates 80-90% incremental margins, whether the units are Celeron, Pentium or Xeon. This is magnified because Intel has made great strides in extending the usuable life of its manufacturing equipment, thus reducing the depreciation burden on the cost of goods sold. 2) Positive mix shift. The first half was the Celeron half. Given that the manufacturing costs for a Celeron, Pentium, and Xeon are roughly the same, gross margin dollar gains for an incremental Pentium shipment are about $225, we estimate, compared to $60 for a Celeron. This is the flip side of the declining ASP story. Clearly, recent price cuts have helped the Pentium III, while the new "Profusion" chipset for 4-way and 8-way multiprocessing is helping Xeon sales this quarter. Best Regards, Tom