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

To: Amy J who wrote (109410)	9/7/2000 3:25:10 PM
From: StockHawk	Read Replies (3) \| Respond to of 186894

>>demand reported in the previous quarter had dropped prior to the release of this flagship product (of course), so the analysts had decided to project this one-time pattern way out into the future, according to their reports. I have absolutely no clue why they would do something like that<< In building a model you must start with what you know. What is known is what happened yesterday, so that is the base. It will be adjusted, but it is still an important factor. I was reading an academic report a short while ago. The author was making a point that the market thinks long term, even if it seem to react to the short term. If the market is efficient, it should value a company based on its discounted future cash flows. If we were to construct a discounted cash flow model for Intel it would have to reach far into the future, projecting results for perhaps 20 years. Now if something happens to change the growth projections, that change does not just effect the current quarter, it effects every quarter in the model. So even a minor change today can have a large effect when extrapolated. That is one explanation why the market reacts so violently to a missed earnings report or a downward earnings revision. Why does the market listen to an analyst like Kumar when he makes a downward revision? Because most analysts we hear about work for brokerage houses. One of the ways in which the houses make money is by selling stock to investors. So they are biased. They are most likely to see good things and say good things. They want to be on friendly terms with the companies they deal with, they want their firms to underwrite more business and sell more stock. So when one of them says something negative about a particular company there is reason to believe that something is really up. They are going against the grain, and investors should take notice. That does not mean they are right, or even on the right track, but for many people where there is smoke... The market hates uncertainty and a negative pronostication breeds uncertainty. What IF he is right. Lets not stick around to find out. StockHawk

To: Amy J who wrote (109410)	9/8/2000 11:01:21 AM
From: dmf	Respond to of 186894

Hi Amy, thanks for sharing your education, technical and financial. RE: "From this experience, which I admit was an extreme example, it taught me to always regarded their advice with caution and trust my own judgment." Good advice. Good example. RE: "This experience also taught me that analysts tend to look backwards, like an accountant, not forward, like a marketer." This, and too few data points, explain a great many things that appear unexplainable. RE: "I tend to trust the opinion of folks on this thread - folks who live and breathe high-tech..." Agreed. My six weeks in Silicon Valley was a life changing experience. Not much, but enough. RE: "I'm a tad more than 50% in INTC. I'm a big believer in INTC. It's the kind of company that I can invest in and not worry too much about - that's important to me. Worry is time." I'm a big believer in INTC, too. Besides being a manufacturing and marketing powerhouse, INTC continues to look forward and in many ways, define the future. I like being a part of that. RE: "IMHO it's a fab war....Intel's manufacturing has the capability to really crank high volume. As an investor, this is what I focus on." And what helps me sleep at night! RE: "...current server capacity is something to get excited about - to me, it implies a large opportunity." An exciting opportunity that's not going away. It may morph into another, yet unimagined opportunity, but it's very, very real. RE: "I'm hanging around for the long-term and I bet you are too." Hanging around and enjoying the view...of Intel's past and Intel's future. I don't know who said it first, but I know success does not depend on how many times you or I or Intel gets knocked down, but on how many times we get back up. Thanks, big time, for your thoughtful reply to my vented frustration. Regards, dmf

To: Amy J who wrote (109410)	9/8/2000 11:23:16 PM
From: Dan3	Read Replies (3) \| Respond to of 186894

Re: IMHO it's a fab war. What's AMD's fab capacity? Not all FABs are the same. What's important is the right FAB at the right time. What matters in the coming year are sub .18 copper FABs. IBM, Motorola, AMD, and TSMC have worked hard over the last several years so that they would all have them. It's a FAB war all right, and Intel is coming into the battle unarmed. Estimates vary, but given that the cost of $120 processor and a $500 processor are about the same (at $30 to $60) it's easy to see that a disproportionately large fraction of the total profits in the microprocessor industry come from the 10% to 20% of chips that constitute the high end. Intel isn't going to be particularly competitive in that area during the coming year. In large systems, SUN is vulnerable, but IBM is most likely to take any market share that SUN loses because IBM has the FAB capacity to produce fast, high end chips. In small servers and high end desktops and workstations, AMD is very well positioned to take a significant fraction of a market that has been 99% Intel for the past decade. Because AMD has the the FAB capacity to produce for that market - and Intel doesn't. If IBM (and perhaps Alpha/Compaq fabbed by IBM, if recent rumors are correct) keeps Intel from expanding into the large system space, and AMD takes half of the small server and high end PC/Workstation, it won't be good for Intel. 40 million processors at an ASP of $140 is not as good as 30 million processors at an ASP of $210. And it will be the lack of FABs that causes the change. AMD broke ground on its .13 copper FAB in late 1996, Intel broke ground for its first .13 copper FAB a few months ago. Regards, Dan