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

To: Dave who wrote (162954)	3/26/2002 7:44:03 AM
From: Road Walker	Respond to of 186894

Intel's Plan Was Spend to Defend Market Share By Tish Williams Senior Writer 03/26/2002 07:15 AM EST It doesn't take a recession to give Intel (INTC:Nasdaq - news - commentary - research - analysis) a spending leg up. Like other tech giants, Intel vowed in 2001 to put distance between itself and the competition, paving that span with dollars spent on research and development and new technologies. While the concept has a nice ring to it, in the year since the PC downturn began to pummel balance sheets across the business, product cycles have ruled the chip market. True to form, however, Intel used its size to swallow punishing price cuts before its Pentium 4 rollout and is currently outspending all chip companies on equipment that will provide an enduring manufacturing benefit. Indeed, Intel's longer-term advantage from the slowdown may be on the manufacturing, rather than chip-sales side. Even though its 2002 capital equipment budget is 25% smaller than 2001's, the company is the big spender among chipmakers. "You can make the case that Intel made a counter-cyclical investment that will pay off," says Prudential analyst Hans Mosesmann. "In terms of units, Intel's going to gain market share (in 2002) because it has a much stronger product mix this year and also related to aggressive investments it's been making over the last couple of years." Intel's $5.5 billion 2002 capital expenditure plans are more than double the closest competitor's planned outlay, and well above a sub-$1 billion buyer such as AMD. With its money, Intel is stocking up on newfangled 300mm technology, which will boost its chip output per wafer. Although Intel's capex plans are well below last year's $7.3 billion, Intel's got the most to spend on technology, which allows it to crank out the chips and further harass AMD on pricing. It's a familiar story to both, with a minor twist thanks to an economic downturn, that puts the onus on AMD to out-innovate Intel, while Intel tries to spend its competitor out of business. In 2001, at least, AMD did just that, but with new technology and better chips, Intel will make the job even harder in 2002. AMD proponents argue that the underdog's chips offer every bit of the Pentium 4's performance and more, which will force Intel to respond to its shortcomings with production changes. Pentium Performance If anything, Intel's 2001 shows how tough it is to maintain a pace with humbler chips. According to Gartner Dataquest figures, Intel's unit shipments went from 82% in 2000 to 80% of the market in 2001, while AMD (AMD:NYSE - news - commentary - research - analysis) enjoyed the reverse, climbing from 17% share to 20% year over year. Gartner's Martin Reynolds explains that Intel's average selling price decreased in 2001, due to market conditions and the fact that it "couldn't drive Pentium 3 performance up as much as it wanted." Intel used pricing to compensate for the lower performance of Pentium 3s, slashing the price of older models by 50%. Compare that with the more moderate 10% to 20% periodic reductions under way in 2002 on the Pentium 4 as newer versions of the chip hit the market. Yet Intel's price cuts hardly made a dent in its overall health: Intel ended 2001 with 91% of PC market revenues, compared with 92% in 2000, while AMD gained slightly from 7.7% in 2000 to 8.8% in 2001. "AMD had around 20% at the start of the year and still has 20%," of the PC market, says Dan Scovel of Needham & Co., who argues that the big story of 2001 was worldwide chip-industry sales diving 32% from $204 billion to $139 billion, not any market share news. "In round numbers, it's not clear in the AMD-Intel issue that there was a significant shift due to the downturn in the economy." Overall, business fortunes followed the company with newer chip offerings -- AMD had the edge through most of 2001, while Intel evened the score in the second half of the year with fanfare surrounding the Pentium 4 chip. In 2002, the sequence is expected to reverse slightly, with the Pentium 4 gaining strength and AMD waiting out the year before rolling out its next-generation chip, code-named "Hammer."

To: Dave who wrote (162954)	3/26/2002 8:04:17 AM
From: Dan3	Read Replies (1) \| Respond to of 186894

Re: Perhaps two market shares should be calculated. One including X-box shipments (since it is an x86 class uP) and one not including X-box shipments. Now, if we could only get solid, consistent numbers for either one!