To: Bill Jackson who wrote (86512 ) 1/11/2000 10:49:00 AM From: tejek Read Replies (1) | Respond to
Bill and thread: Thanks to Athlon, Intel has lost its monopoly on high-end desktop chips. Worse for Intel, its usual response to AMD processors, a price-cutting counterattack, might hurt the giant chipmaker more than it hurts AMD. In the past, Intel staved off AMD's low-end PC chips by slashing prices, a move it could afford thanks to robust margins on high-end chips. Now that AMD is attacking Intel on the high end, a price war seems a riskier option. Even the staunchest AMD bears are going bullish. Last week, AMD's most consistent critic, U.S. Bancorp Piper Jaffray analyst Ashok Kumar, upgraded the stock to buy from neutral and forecast fourth-quarter revenue of more than $1 billion -- something AMD has never pulled off -- and a profit of 5 cents per share. For investors who have been long AMD, it's about time for the enthusiasm. "It's gratifying to have people recognize AMD," says Pete Klein, a portfolio manager with hedge fund Gelfand Maxus Asset Management, which has stuck with AMD since 1996. Klein has watched AMD stock rise 111% since Oct. 19 as the Athlon began coming off AMD's production lines bug-free, and companies like IBM (IBM:NYSE - news) and Compaq (CPQ:NYSE - news) embraced the chip. This time around, the situation is reversed. It was Intel that couldn't meet the demands of computermaker Gateway. It was also Intel that left Dell (DELL:Nasdaq - news) advertising machines with Rambus-based chips that Intel couldn't deliver. Intel finds itself without an arsenal for a sharp counterattack. Via's high-speed PC-133 chipsets will boost Athlon's memory speed, while Intel says it won't have a PC-133 chipset available until at least April. "There hasn't been a hiccup from AMD since February, which is a very long time for AMD to not have a problem," says technology analyst Nathan Brookwood of Insight 64, which counts AMD and Intel among its consulting clients. "Intel is the one that has demonstrated manufacturing problems." GO AMD GO AMD GO AMD GO AMD GO AMD GO AMD GO AMD And while the 800 MHz Athlon is only $3 cheaper than the 800 MHZ Pentium 3 chips that Intel sells for $851, Intel has less room to drop its prices. AMD has navigated dire straits for so long that investors cheer when its chip prices average above $100. Intel investors, by contrast, would fret if its average chip price dips below the current $200, says Brookwood. And if AMD takes only a sliver of Intel's share of the high-end chip market, the impact on AMD's profits would be significant. Still, some institutional investors won't give AMD a second glance. "It's hard to see how AMD can compete against [Intel], which can outspend them 10 to 1 or more," said Intel investor Edward Vroom, co-manager of the Roanoke Asset Management Reserve Small Cap Fund, which holds stock in Intel and not AMD.
