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

To: Hightechhooper who wrote (123876)	12/30/2000 2:07:45 PM
From: Elmer	Respond to of 186894

Re: "I don't pretend to know as much about INTC as you but I don't see how P3's and Celerons consumer desktops can represent 75% of sales." Perhaps I misunderstood your original post. I was referring to total processor sales, not just consumer PCs and my number was just a rough guess. EP

To: Hightechhooper who wrote (123876)	12/30/2000 2:34:41 PM
From: Dan3	Read Replies (2) \| Respond to of 186894

Re: I don't see how price competition in 20% of the business can be considered a "price war Intel gets 125% of its profits from the Intel Architecture Group (the remainder of the company loses money). Intel doesn't sell computers, it sells chips. Consumer desktops and corporate desktops both use the identical parts, so if Intel lowers prices to keep market share in retail desktops it must also lower prices of the chips it sells to the corporate desktop market. So even though (by your reckoning) consumer desktops only constitute 20% of their business, the parts they have to lower prices on account for (.20 + .35) x 1.25 = 68.75% of their profits. That math may look a little funny, but think of it this way: Intel's profits in flash and servers make up for their losses in Misc and the losing areas of comm. Some parts of their business cancel each other out in terms of profits, much of what remains is consumer and corporate desktops. AMD hopes for $100 ASPs and makes money at anything over $70. INTC hopes for $200 ASPs and makes money at anything over about $140. Intel is guaranteed (for H1, at least) high ASPs for mobile chips and very high ASPs for server chips. But for the bulk of their business, they are probably going to have to accept both lower ASPs and smaller market share - Intel's costs relative to AMD's are just too high. Intel can't lower prices enough in the consumer market to prevent AMD from gaining market share without crucifying itself in the corporate desktop market. Dan