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

To: Tony Viola who wrote (105074)	6/28/2000 10:35:00 PM
From: chic_hearne	Read Replies (1) \| Respond to of 186894

Re: So, the AMAT thread is the one on SI that watches this stuff like a hawk. Pays to own some AMAT just to have an excuse to go there Tony, Thanks for your point of view. I think it's time for me to watch the AMAT thread. I'm leveraged to the teeth in AMD and the semi cycle is probably more important than I realize. I view INTC and AMD seperate from the rest of the semi's because with 6 billion people in the world with today's output, we have a long ways to go to meet demand. I think even with all of Intel's new fabs, it still won't be enough. One thing I'm learning as an investor, it's not what you know that matters, it's what the street thinks they know that matters. chic

To: Tony Viola who wrote (105074)	6/28/2000 10:55:00 PM
From: TimF	Respond to of 186894

As for AMD, they've had a tremendous run. Do their holders think it will go up forever? They have had a tremendous run from being valued at almost nothing compared to their potential. This is mainly because for a long time they had not lived up to that potential. Now they finally are performing well. The current price is still undervalued unless you assume that AMD will stop executing well. Intel produces about 5 times as many chips as AMD. If you double that 5x difference for Intel's better track record, and double it again for Intel's better margins (mainly due to the high margin server CPUs) and greater amount of non CPU business, that would support an INTC value of 20x AMD. However Intel has a market cap of almost 36 times that of AMD, and this ignores the fact that AMD sells close to as much flash memory as Intel and has been executing better with CPUs recently. If AMD was to go up another 80% then it might be valued fairly by this admittedly simplistic analysis. If you look at projected future earnings AMD also looks undervalued. If you take the estimate for FY 2000 from SI and multiply it by a P/E of 25 you get a price for AMD of 129.75. Personally I think AMD will make at least $7/share this year and that 25 is to low of P/E for a company that is growing like AMD but even this conservative estimate would result in AMD share price growth of about 60% by the end of the year. Right now AMD is growing faster and earning more per share but it stock price is still significantly below that of Intel. I think Intel is a good company and the stock is a good investment, but I think it has gotten to big to continue to grow at the rate that it has been growing over the past decade. Intel has a better long term track record and is perhaps a safer long term investment then AMD. I think AMD however is more likely to give a strong return over the next six months to a year. Tim