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.
wbmw, so far in the new millennium, P/Es and dividends are the numbers that seem to most impress and value investing is the way to go. It seems one of the few exceptions to that are rule are tech companies in DVD and other digital consumer products. In that sector, revenue growth is so strong that the lack of a P/E is overlooked; otherwise, the company better be making some money. And I have learned the hard way that its best to go with the flow. ;~))
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.
If 'if' is not the issue but rather 'when', then its the 'when' that looms large over the tech world. 2004 is the latest date given for a tech turnaround. It developed after latest round of major tech earnings reports this quarter. I don't know if you've noticed but when a tech company showed improvement in its EPS, rarely did it come from increased revenues but rather lowered operating costs. Plus, forward guidance continues to suck.......so some are beginning to think that 2004 is more likely as a turnaround date.
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.
The only reason INTC is allowed to carry a larger P/E than normal is because it is a DOW, S&P and Naz component stock.........and demand by index funds allows its P/E to remain high. However, when INTC guided lower in June, the funds gave notice that they would not support the stock indefinitely and INTC's stock dropped to a 52 week low of $16.26[yes, Maui, the number's correct........I double checked it. <g>].
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.
I disagree. AMD made significant inroads with the Athlon. Its chip sales have dropped back down but I believe [without checking] that they still remain above pre Athlon levels. More importantly, what can't be measured is the significant improvement in AMD's reputation and good will that the Athlon generated. Whereas pre Athlon, AMD was the laughing stock, also ran competitor to INTC, it is now consider a true competitor albeit much smaller.
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.
I will be surprised if INTC comes thru with a good answer.....whenever they scramble, they screw up badly. As for the architecture, I am not a semi engineer so I must base my claims on the comments of others who are. And generally what I have read is that Athlon is the better chip. That's not to say that the Pentium is bad but rather its the comparison between a mercedes and a cadillac.
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.
Your comments tie in with what I said earlier. Five years ago, if AMD tried to hype anything, they would have been laughed out of Dodge. Now analysts as well as others in the industry know that AMD can come through........and they know that because the Athlon is a quality chip. Plus, AMD's performance and execution have improved considerably in the past 5 years while the added competition has lessened INTC's reliability and performance.
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.
I don't mean to be overly critical but you are happy that INTC has overcome execution problems that would be more typical of a startup that a multi billion dollar company? I'm sorry, wbmw, but I am not impressed. Those problems should not have happened in the first place especially with all the $$$ INTC has to throw at a problem. As far as I can see, they happened for two reasons: no one was watching the ship too closely plus INTC was used to setting its own time frames when bringing a chip to market. Once again, that all changed when AMD brought the Athlon to the marketplace.
In addition, think about what you wrote.......they propelled themselves into "a leadership position over their competitor" who is just a little more than 10% their size; a competitor who just 5 short years ago couldn't get arrested if they tried. How can you be impressed with that?
I will be impressed with INTC when it stops resting on its laurels and can get a chip to market in less then ten years........when it reacts seriously to a major slip in margins and reduces operating cost accordingly.
People talk on this thread about INTC's incredibly efficient production and how it has very low production costs. Frankly, I think its a lot of smoke and mirrors and that only their special relationship with DELL makes their current margins possible......but I have no way of proving it so I will stop there. However, I would love M. Dell to get over his bias and shake up the world a little bit, and order some AMD. That would be the wake up call that INTC desperately needs to get its operation into shape.
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.
Why do I have to provide you numbers......where are all the great web hosting companies that were to be the second coming? What did INTC do with its own web hosting division? You surprise me when you ask for numbers. People don't give up on a profitable 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.
Just for record, the companies I owned that INTC acquired were chip companies and not web hosting firms, and two of the three were profitable. I never owned a web hosting stock and more to the point, when I posted regularly on this thread and heard that INTC was going into web hosting, I accused the INTC longs of having a CEO who wore an apron to work. I am sorry......I know the net was new and people were exploring all the possibilities but when I have to read a business plan ten times and still can't get the concept, then I have to wonder if the business makes sense.
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.
I know.....like I said the three companies that I owned and INTC bought were chip companies in the communications and networking fields. One was DSP Communications....unfortunately, I can't remember the names of the others.
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.
These acquisitions occurred well before the drop off in business. At the time, it was pretty widely known that INTC was buying companies who's chips were no longer state of the art and their sales were starting to peak. When confronted with that info, INTC's response was that the IP [intellectual property] that they acquired with these firms made up for the chips which were no longer state of the art. Frankly, most people including myself thought that was spin but INTC managed to continue to churn out profits so no one complained too loudly.
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