Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (108296)	4/28/2000 6:00:00 PM
From: hmaly	Read Replies (1) \| Respond to of 1575594

Ted. <<< Again I refer you to the margins differential above...how can Intel not make money at ASP's at which AMD can make $. Your comments completely ignore the issue that Intel has had and continues to have excellent margins....and AMD's are improving but still suck. Its not in our best interest as AMD investors to delude ourselves (like some of the Intel longs). <<<< Ted, I believe you are ignoring one of the higher costs Intel has which is the $350 billion capitalization differential and its costs. Intels fabs (at 4 billion each with equipment) and cash are probably only worth 60 to 80 Billion. Where has the other 270 billion gone and how much does it cost to pay reasonable returns.

To: tejek who wrote (108296)	4/29/2000 2:53:00 AM
From: pgerassi	Read Replies (3) \| Respond to of 1575594

Dear Tejek: Intel's gross margins are irrelevant. It is their net margin that is at stake. Their Computing Products Group's Gross margin does not take into account the various other groups. All of the other groups lost more than $400 Million last quarter. Now take their earnings, 2.6 Billion, and divide that by the number of processors they claim to have sold, 32 Million, and you get about $81 in ASP. They claim their current ASP is about 190. Therefore at an ASP of about 100, they will lose about $300 Million a quarter. AMD made 175 Million at an ASP of 87. They would start to lose money at an ASP of 61. When AMD starts to lose money, Intel will lose about 1.5 Billion a quarter. At that rate, Intel will eat up its book value in about 20 quarters. At that rate, Intel would be valued at about 1.3 times book value or $13 dollars. There would be a shareholder revolt at Intel, employees would leave in droves, etc. Now I know this is very rough, but Intel is at a high evaluation. I believe it to be too high. Someone said that Intel used to never exceed a PE of 22. Given this reference on current earnings, Intel should trade at 69 and AMD at 100. Thus AMD is at 88% of this limit where Intel is at 181%. Thus Intel can not afford to have investors take a hard look at it. A big price war would initiate that. Pete