Ted (LONG), Re: "Still using P/E is an indicator??
>> "Still"? "Going back to" is actually the more appropriate response regarding this value."
Not a good idea, IMO. Gross margins are under a lot of pressure because of an artificially low demand. P/E ratios can change dramatically from one quarter to the next.
Re: "This is a value that can easily be reduced by 3x in a year's time for Intel if corporations return to normal spending levels for PCs.
>> That's a big 'if'. The latest estimate is that IT spending probably will come back as early as the second half of 2003 but may be off as late as the first half of 2004. How long do you think INTC will be allowed to have its high P/E in this market?"
It's not an "if" at all. It absolutely must happen. "When?" is still an issue, but I have not heard from anyone that it will take as long as 2004. But even if it does, I think INTC will be allowed to carry a high P/E in the mean time. It's simply too volatile of a business environment for investors to value INTC based on a current ratio.
Re: "First, performance does count beyond this thread.....not as much as it once did but it is still an issue. Secondly, when it first came out, the Athlon sold like hot cakes in spite of its lack of marketing and production difficulties."
Athlon did sell like hotcakes, but it sold even more because of good timing. AMD launched Athlon when Intel had trouble meeting market demand, and both consumer and business spending was at its highest levels. When this happens, it creates the perfect window for customers to explore other choices. Later in 2000, Intel had many execution screw-ups, and opened the window for AMD even further, as many distraught customers went to seek alternatives. In 2001, many of those customers ended up coming back to Intel, even though the Athlon continued to have a performance advantage over the Willamette core. That should prove that performance was not the real issue. I don't expect Hammer to have an instant appeal with the OEMs, unless Intel once again opens the window for AMD. That is of course possible, but I wouldn't bet on history repeating itself this time. There are a completely different set of variables to consider.
Re: "This thread has been too long without the likes of Scumbria if its forgotten about the quality of the Athlon's architecture.......especially when compared to the architecture of the Pentium series. Good architecture sells........why do you think the buzz on the Hammer series is so strong?"
I know that this thread doesn't have that high of an opinion for the Pentium 4 micro-architecture, but in many cases, it is just as appealing. In fact, to many buyers, it is more appealing than the Athlon micro-architecture. Hammer brings very little to the table for the desktop market. For the server market, the links based architecture offers many exciting features, but AMD is new at this market, and I expect them to stumble, at first. I also expect that Intel is scrambling to catch up, and they might have a good answer before AMD has a chance to capitalize on their advantage here.
Re: "Again, I'm not sure that the market is convinced that AMD will gain back lost share from Intel. AMD is hyping Hammer pretty hard, but it still has not done anything for AMD stock price. I think investors have "wizened up" to the old AMD Hype Engine.
>>If the market were not convinced of AMD's future success, its stock price would be near 1 in this business climate....especially with no P/E."
I stand corrected. AMD does appear to be overvalued, as you state. Many investors are no doubt banking on Hammer, as I once did. That is, of course, the only reason why AMD continues to be valued so highly.
Re: "Company hype doesn't sell anymore; product potential still does. Besides, the hype is coming from outside AMD."
Hype is propagated by the analysts, but is fed by the AMD Hype Engine. They are performing quite well in this area, too, with multiple demonstrations, many "hints" about possible OEM and OSV/ISV/IHV support, and tons of ambiguity about overall performance. Totaled up, this gives analysts all the information they need to give off any impression that AMD wants them to. Expectations aren't being managed well at all, and as soon as reality hits, AMD stock is likely to take a nose dive.
Re: "In the last 5 years, since I've been watching, nothing has changed at INTC."
Then you are not very observant. To me, Intel couldn't be more different than they were 2 years ago. Back then, they were stumbling on their most important product lines, and scrambling to catch up in just about every way. They had two recalls, a memory interface that nobody was willing to pay a premium for, but one that the entire company was committed to implement, and a next generation product line that underperformed the entire industry's expectations. And they were able to change all of this within a year's time. The most phenomenal thing was that they not only fixed their problems, but they also propelled themselves into a leadership position over their competitor, who had once had a commanding lead. For you to say that nothing has changed at Intel, you would have to be talking about a very limited scope, IMO.
Re: "in retrospect, Barrett's spending spree was a bad idea, but the basis for it wasn't all that bad. When you have more money than you know what to do with, you throw an amount of it at a target, and see if you happen to hit a bull's eye.
>> His push into web hosting was a joke and INTC lost tons of money. If anyone had done the numbers, there was no way that web hosting could be profitable."
What bullcrap. Do you have the numbers on this? The idea behind web hosting was a great one, especially since a good percentage of growing businesses were moving onto using the web as their primary method of business. At the time, very few people, if anyone, was predicting an end to venture capital, or the decline the Internet startups. Does that make the entire industry a bunch of idiots? Perhaps, but you yourself admit to owning a number of small companies at the time, and that would make you an idiot as well.
And one more thing: very few, if any, of Intel's acquisitions supported their move into web hosting. The vast majority of Intel's acquisitions went towards their networking and communications businesses, which had the unfortunate consequence of the worst timing in the industry, having achieved the #1 ranking for volumes shipped at the absolute sharpest drop in demand that the networking and communications industry has ever faced. This has continued to cause Intel's networking and communications businesses to post multiple losses, even though they've simultaneously moved to the top position. Whenever the upturn does occur for these markets, though, I expect these businesses to be profitable, and to add a healthy amount to Intel's bottom line.
Re: "INTC lost hundreds of millions if not billions due to these questionable acquisitions.....which were rarely accretive to its bottom line."
The market for networking and communications ICs is not nearly saturated. Some of Intel's acquisitions were bunk, but the others are likely to turn a net NPV shortly after the market turns around. This is one of the main reasons why I continue to think that Intel is undervalued. As soon as I am convinced that investor pessimism has hit a bottom, I will be loading up once again. I'm not going to go in early any more, though. Been burned too many times.
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