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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Apollo who wrote (33308)	10/18/2000 10:48:00 AM
From: saukriver	Read Replies (1) \| Respond to of 54805

Intel is transitioning. They didn't generate as much equity profits this quarter as they did last quarter. But margins remain in the 63-64% range, and they're guiding toward higher margins by the end of 2001. IF they can do what they say they can do, which in the last 2 years is something shareholders should not take for granted, then the P4 ramp up will be steep, and ASPs should rise. Similar to Xeon, and the eventual ramp up for Itanium. Meanwhile, MPU costs keep coming down, with FABs in place and others coming on-line, and they're transitioning to a 0.13 micron size next year, which should mean greater profits. Another view is that these clowns missed twice in 1999 and once so far in 2000. So, as you say, shareholders should "not take for granted" that these jokers can do what they say they are going to do for 2001. On top of that, PC demand continues to slow. I visited a CompUSA store yesterday and was struck how different (that is, empty) things were in the store compared to 5 or even 2 years ago. Couple of women checking out cellphones. 5 guys getting the latest graphics accelerator card. Two people checking out PDAs. A few people intrigued with the $300 i-opener computer. Pretty slow otherwise. I cannot see many people buying PCs this holiday or many companies loading up in the fourth quarter. This week's Newsweek has an article called "Is the PC Boom Over?" frighteningly similar to my trip to CompUSA: msnbc.com For grins, I looked at the chart of IBM for the last 20 years to see what would happen if you invested in the aging gorilla of mainframes in say 1985. By that point, IBM's mainframe biz was maturing and IBM had licensed MSFT DOS for what was then called the IBM PC. siliconinvestor.com Not bad, but IBM was clearly a gorilla of mainframes. With Intel, that is not so clear (except in TRFM). The king-gorilla distinction is key. If you belief Intel is a king in the mature PC chip market, it is time to bail as the slowing revenue growth is now crystal clear and current Intel management has not demonstrated a sustained ability to execute over the past two years. If you believe it is a gorilla of the mature PC chip market, then hang in there because even clowns for management cannot change a gorilla's fundamentals.