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.

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

To: Road Walker who wrote (133722)	4/30/2001 3:16:49 PM
From: tejek	Respond to of 186894

John, I guess Kurlak is trying to make amends. __________________________________________________ Intel Analysts Meeting Puts Competition on Notice By Thomas Kurlak Special to TheStreet.com 4/30/01 1:10 PM ET "Down cycles turn into upswings." So said Intel (INTC:Nasdaq - news - boards) CEO Craig Barrett, and so it will be if new products, market share gains and lower costs have anything to do with it. Intel presented a technology tour de force Thursday at its New York analysts meeting. Combined with a research-and-development and capital spending commitment that dwarfs all other chip-industry players, this show of product strength and depth puts competitors on notice that every chip market is fair game for the industry leader. On top of a reinvigorated capability to continue its dominance in microprocessors with the rapidly growing Pentium 4, Intel is soon to emerge as a player in cellular-phone chips with major new design wins around the world. Intel is finding wide support among designers of next-generation cell phones and wireless Internet appliances for its Personal Client Architecture. This chip and software configuration relies on easier-to-program, higher-level software language working with Intel processors and flash memories. The cell-phone industry's dependence on hard-to-program digital signal processors may become a thing of the past, and an era of Intel leadership in wireless devices may be at hand. In the emerging low-power PC microprocessor market, Intel is fielding devices with twice the performance at one-half the power consumption of Transmetta, the latest Intel challenger in microprocessors. In the high-performance computer server market, Intel is on the attack with a second-quarter release of the 64 bit Itanium processor that can be hooked together to run in parallel in 2 to 512 chip combinations. Using just its older 32 bit Xeon processors, Intel has quadrupled its share of the server market to 34% over the past year (for servers using more than 4 processors). As CFO Andy Bryant said Thursday, Intel plans to win through technology innovation. Barrett backs that up with a $7.5 billion check for the best manufacturing equipment and facilities money can buy. Add another $4.5 billion for R&D, and investors can see that Intel has a plan -- a plan to beat the competition on product design and on lower production cost made possible by a forced move into manufacturing on larger 12-inch wafers using smaller feature sizes. Where is Wall Street on this company? With a few exceptions, most firms seem to be overly concerned about short-term business conditions, even though management reports improvement. A note Friday from one broker describing the meeting says "no substantial incremental news emerged," and there was "little additional evidence to sustain a substantive recovery scenario." Another broker cautions that "the company continues to have limited visibility into orders," while a third observes that limited visibility made it hard to forecast. These views look out of date. Management said distributor sales increased in the first quarter to near the record of last year and continued up in April. This means customers have drawn down their inventories and are turning to distributors for short-term supply. Confirming that, Intel said microprocessor inventories at PC makers fell to single days of supply in the quarter and continued lower in April. In Europe, which is of concern to many, Intel's corporate order activity is stronger for servers and stable for PCs after dropping in the first quarter. In Asia Pacific and Japan, now Intel's largest market, demand is good. Over the balance of this year, Intel will probably show moderately higher sales, starting in the second quarter, following the 23% plunge in the first quarter, the worst drop since 1980. The really strong numbers are in 2002 when the corporate PC replacement cycle kicks in. That will be for PCs bought in 1999 ahead of Y2K. Adding fuel to the upturn will be the need to rebuild inventories. Current estimates of about 65 cents a share for 2001 are based on a sales level below the end-market consumption rate. Normalizing for sales sufficient to just sustain current end-market consumption would produce earnings more like $1.15 a share. In each up cycle over the years, Intel has been able to at least double earnings. That puts a target on earnings of about $2.30, not bad for a $30 stock that grows at 15% to 20% long term. -------------------------------------------------------------------------------- Tom Kurlak is the former semiconductor industry analyst for Merrill Lynch, now retired.