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

To: Paul Engel who wrote (139907)	7/22/2001 12:06:33 PM
From: Dan3	Read Replies (2) \| Respond to of 186894

Re: Take a look at AMD - it's fetching only $17/share - and with anticipated losses this quarter Take a look at Intel, with it's ASPs remaining something of a mystery, since they won't ever release anything that even approaches a hard number. They did mention that their chipset units were up, too, and we know that VIA got creamed in the quarter. What Intel actually gets for its CPUs is something they refuse to let anyone know much about. Their limited slip in revenues may be due as much to a doubling of chipset sales as anything else. Intel also restructured what characterized its "other" groups for the Q2 report. The Intel Architecture Group includes microprocessors, motherboards and board-level products, including chipsets... During the second quarter of 2001, the company completed the combination of the operations of the Networking Communications Group and the Communications Products Group to form the new Intel Communications Group. Did the network chips that are now on so many motherboards get reclassified from "networking group" to "board level IAG?" It would be a reasonable move, that would move X dollars of revenue from "other" to "IAG." Was some other re-classification made? When did Xircom's $100 million or so in quarterly revenues start being consolidated into the "other" category, which still showed a 20% drop for the the quarter? Intel APS may not have held up quite as well as they'd like you to think, but it was still the last of the quarters in which they held several advantages which are now slipping away. Q2 was the last quarter in which Intel maintained a solid "smaller die" advantage across most of their unit sales. That advantage gained them the entire notebook market, most of the business desktop market, and most of the server market. Even competing against the smaller Tualatin die, AMD has been able to achieve sufficient power savings in the Palomino core to enter the mobile market in volume. The newer SMF package and lower energy consumption will allow for Athlons to (finally!) be easily used in small form factor desktop cases. The only way for Intel to keep such AMD boxes out of the business market will be to lower the ASPs they receive in that market. For the next several quarters, Intel is going to be competing against the Athlons with 217mm2 P4's that require large heat sinks, power supplies, and air flow space - Intel now has the disadvantage that crippled Athlon's ability to compete in the business market. A noisy, 1.5 cubic foot box is just not a welcome presence in a small cubicle, and a small quiet box that can reliably support a P4 is expensive to build. Intel made much of its money last quarter on millions of 866MHZ PIII's that were cheap to FAB, and chep to fit into little boxes. Those factors let intel sell them for $150, making large total profits. They made most of the rest in the mobile market. They're getting hit hard in the notebook market now, and small form factor desktop will be facing similar pressure for Q4. Going forward, they're facing much tougher competition all their markets. The number of buyers willing to pay $1,000 extra (at discounted retail) to move from a 1.5GHZ P4 to a 2GHZ P4 is pretty limited. Many of those that are interested enough to pay that difference, are interested enough to know that the performance of a Palomino Athlon at 1.5GHZ is higher than that of a P4 at 2GHZ. The raw cost of building a competitive P4 desktop is higher than that of building an Athlon desktop: Wafer cost is about $20 higher, motherboard cost is about $20 higher, case, heatsink, and powersupply cost is about $10 higher. At retail that adds $100 to the system cost - if Intel sells P4 for $100, the OEM sees a cost of $150 relative to whatever an Athlon or Duron is selling for. The situation is analogous the the one AMD found itself in when it was selling expensive to produce cartridge Athlons requireing expensive motherboards against inexpensive coppermine PIIIs that plugged into inexpensive motherboards. AMD had to accept $50 - $75 less per chip for an OEM buyer to "see" the same cost for both Athlon and PIII. P4 on single channel SDRAM or DDR will cut that cost differential in half, but as long as Intel limits themselves to SDRAM, they will hurt what remains of any performance aura P4's nominal clockspeed has brought them - and that will limit what premium they can charge for their chips. This is why I think that, while AMD's ASPs could get knocked down to $50 short term, Intel's would then get knocked down below $100 - which would hurt Intel with it's $6+ Billion quarterly costs more than a $50 ASP would hurt AMD.