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

To: andreas_wonisch who wrote (136793)	6/6/2001 3:23:04 PM
From: tcmay	Read Replies (5) \| Respond to of 186894

CRUSH II--Slapdown in the Silicon Valley "Re: Intel is just toying with AMD at this point." "What purpose does that fulfill? Is this Intel's way to maximize shareholder value? And when will Intel stop toying with AMD? " Amongst other things, it staves off an Antitrust case. Or one of the b.s. "fairness" cases filed by the FTC. (Intel dodged the FTC case, but a European "fairness" case is now brewing, as you all know. If the Dems win back the White House in '04, expect new actions to cut the successful down to size.) Intel clearly has the manufacturing muscle and the cash in the bank to outlast AMD in a price war. Unless AMD were to have dramatically higher yields and lower wafer costs than Intel has, which is doubtful, Intel could bomb the price so as to cause AMD to hemmorhage money at an unsustainable rate. Crush II. But I expect Intel managers are constantly thinking about the DOJ and FTC mandarins sitting in D.C. looking for any chance to make their careers by attacking Intel for "unfair" or "monopolistic" or other practices they whine about. Not to sound too much like the AntiScumbria, but in our weird society we punish people and companies for being successful. And society presumes to tell companies what prices are "fair." Price a product too dearly, and screams of "gouging!" are heard. Price it too low and screams of "unfair trade practices" are heard. With Microsoft, for example, there's a vocal camp squawking that Windows "costs too much." ("I happen to know that it only costs them 23 cents to press a CD-ROM, and the packaging and shippping is only a few more dollars, so anything above that is gouging.") And there's a vocal camp squawking that Microsoft charges too _little_ for its products! ("It's not fair to us that Microsoft is _giving away_ Internet Explorer...how can we charge money for Navigator if those meanies are giving away their product?!") Not surprisingly, these camps are often allied. Companies are caught between "charging exhorbitant prices" and "dumping." And the U.S. semiconductor industry does not have clean hands, either. Recall the "dumping" charges levelled against Japanese companies? As if we have some magic formula to know what price NEC and Toshiba "should" charge for RAM! (I always thought it would be "turnabout is fair play" for the Japanese to claim that some processors introduced for, say, $200, are being "dumped"...because it's pretty obviously the case that chips are often introduced at prices way below their manufacturing cost, at least early in a cycle. ) A company like AMD, which currently exists as a parasite on Intel (and I mean no disrespect by that term...it just describes the biological relationship correctly), is always sensitive to being affected by how fast the big fish swims. "Hey, you're swimming too fast! How do you expect me to hang on?" If the threat of a DOJ or FTC or Raph Nader or Jesse Jackson public spectacle didn't exist, we could no doubt have "CRUSH II--Slapdown in the Silicon Valley." --Tim May