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

To: maui_dude who wrote (171460)	10/3/2002 12:01:26 PM
From: fingolfen	Read Replies (1) \| Respond to of 186894

Why would MSFT, Dell, IBM not go (somewhat) out of their way to see AMD succeed ? Isn't it better for them in the long run to bail AMD out financially. Dell has always been an Intel only house, but they tend to use AMD to keep Intel honest. Given how successful Dell has been with the Intel-only model, there may not be enough ROI. MSFT probably wouldn't touch AMD with a 10' pole... They're already dealing with huge anti-trust, and picking up a chip manufacturer would scream of trying to become a horizontal monopoly. IBM is more interesting. They have provided process technology to AMD, and may bail them out. Right now AMD is failing... badly. A monetary "bail-out" isn't going to fix the problems. It may band-aid the wounds for a quarter or two, but it won't fix the fundamental problems. I don't think AMD is going to disappear next year, but I do believe they may be bought-out by someone else... but that entity will have to be capable of picking up around $2B in long term debt and either maintain or buy out the contracts AMD has made with the Saxony government.

To: maui_dude who wrote (171460)	10/3/2002 12:23:16 PM
From: NITT	Respond to of 186894

re:" Isn't it better for them in the long run to bail AMD out financially." I don't think so. AMD was a non-factor from the ramp of the first Pentium until the ramp of the Athlon, and things seemed to work. As Intel increased capacity they introduced more low end products (Celeron) to get CPUs under $100 while limiting the cannibalization of their Pentium business. Intel also introduced Xeon to get some more margin at the top. Price moves where orderly and OEMs and retailers were not caught with inventory that lost value very quickly as it has during the Athlon vs Pentium price war. Intel has laid a lot of capacity in place. They can probably build 150-200Mu per year as we move into 2003. If they jack up ASPs to much, volumes will come down. Yes the $50 CPU may disappear, but if the bottom becomes $75-100, then the system overall system price may rise a bit… probably COGs plus a little bit of margin. So a $499 system may go up to $530-$575. It may not even go up, because the OEM and the channel will not have to build in as much extra margin to take into account the speed of the price drops we have today. This will mean less fear to build systems in advance of a firm order, which will lead to consumers (business and home) being able to make a purchase and get what they want much faster. Dell may lose some of there advantage of having a very short pipeline, but I think they come out of this down cycle even stronger. Dell can actually command prices that HP and IBM command, and they make more margin on every box sold. Will MS lose… probably not. They are in the same boat as Intel. Charge too much for windows and less system are sold. They have to cut a good deal for OEMs and then get the aftermarket business.