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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: niceguy767 who wrote (58427)	10/12/2001 7:46:33 PM
From: Robert Salasidis	Read Replies (1) \| Respond to of 275872

Until some killer application comes into existence, CPUs have become commodities (this is evidenced by the current price for the top end desktop CPUs vs only 1 yr ago). I should add that this applies only to desktop CPUs, and only as perceived by the average consumer. (If anything Pentium is a name brand that most consumers can identify) Product differentiation is therefore less important than are margins and debt. What this does, is it allows the higher margin company to discount pricing to the point that it makes a little money, while the competition makes none or is losing money (this happens in all cyclical commodity industries (metals, oil, DRAMs, you name it). At the bottom of the cycle, the dominant company is able to snap up lesser competitors, invest in infrastructure at lower prices, and be better able to take advantage of the up cycle that inevitably follows. I am not saying that AMD will go bankrupt, just that Intel is a better investment at times like these, and that the underdog rarely wins. I would say that based on stock price performance since the cycle took a turn negative, most on the street would agree.