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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Gerald Walls who wrote (98872)	2/12/2000 9:31:00 PM
From: Tony Viola	Respond to of 186894

Gerald, I never saw you as cynical on SI. Hans Mosesmann; Prudential Securities Inc. has an opinion: Intel revving cycle to outstrip Athlon SATURDAY, FEBRUARY 12, 2000 12:50 AM - CMP Media Feb. 11, 2000 (Electronic Buyers News - CMP via COMTEX) -- The competitive landscape in the x86 world is heating up in a way we have never seen before. Advanced Micro Devices Inc.'s new Athlon processor is positioned to compete against Intel Corp.'s Pentium III Coppermine in the mainstream PC-desktop segment. This dynamic has implications for Intel's overall ASPs and a potential impact to the shares of both companies. When the competitive climate heats up at Intel, the company either accelerates the x86 product cycle or takes legal action to affirm its IP position. Both tactics effectively keep the competition from providing processors at the speed sweet spot of the market, thereby assuring that these players are marginalized to selling processors at the very low end of the speed spectrum (at reduced ASPs). Intel's accelerate-the-product-cycle tactic is a very powerful weapon. When the company was caught flat-footed in late 1997-when the sub-$1,000 PC came to market-Intel's Celeron processor ramped into high volume in just a couple of quarters and precipitated the eventual demise of Cyrix and IDT's Centaur subsidiary. Are things different this time around for AMD? Tough to say. To a large extent, it depends on how Intel responds to the Athlon challenge. However, for the first time, AMD is uniquely focused on its processor business, which is a far cry from the broad product portfolio of just two years ago. AMD's advantages entering 2000 include the following: the Athlon is clean, fast, and has plenty of performance headroom; the company has lots of capacity and is processor-focused; AMD has a head start in copper-interconnect technology vs. Intel; and the company is financially stable. AMD's challenges include manufacturing execution, commercial-desktop penetration, and improving processor-infrastructure offerings. What will Intel do? This is an easier question to answer. It will accelerate the product cycle. While the Pentium III Coppermine is good, it's more or less equivalent in performance to Athlon. Clearly, this is not good enough. We expect Intel to introduce its next-generation 32-bit Willamette processor in short order with the intention of changing the entire x86 processor dynamic. Willamette should essentially replace the Pentium III Coppermine by the second half of 2001, and hopefully (from Intel's perspective) eliminate the Athlon as a credible competitor at the new "high end." We expect the pre-Willamette launch hype to be strong enough to create early brand awareness and essentially change the rules of the game once again for 2001. AMD has a good chance to establish the Athlon as a mainstream x86 processor this year as it offers speed and performance similar to Intel's Pentium III Coppermine. Near term, there is a possibility of a price war (which would be detrimental for both companies). However, we believe Intel will be a rational competitor. Once Willamette is introduced, we expect Intel's efforts will effectively position this new processor architecture as the solution of choice for many years to come. Hence, Intel will behave in a rational fashion as long as it enjoys at least 80% of the market. As long as Intel executes, Willamette should give it extra breathing room come 2001. ebnonline.com By: Hans Mosesmann; Prudential Securities Inc. Copyright 2000 CMP Media Inc.