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

To: Andy Patton who wrote (38554)	10/31/1997 11:13:00 PM
From: Paul Fiondella	Read Replies (4) \| Respond to of 186894

Yeh the margins tank, the business model is out the window and your stock goes down the drain. They can't sell PII systems for less than a $1000 any time soon. The chips going into those sub $1000 systems are currently in the P133 MMX and K6 200MMX price category. If Intel cut its prices that aggressively it would take the stock into the gutter. ============================== Much less fun blowing smoke when you are sitting in ....

To: Andy Patton who wrote (38554)	10/31/1997 11:22:00 PM
From: Paul Engel	Read Replies (2) \| Respond to of 186894

Andy - Re: "How will this scenario affect margins? Any idea?" Two forces will be at work. One, a price reduction obviously reduces margins. Two, Intel is in two transitions - Pentium MMX to Pentium II, AND 0.35 micron process --> 0.25 micron process. The smaller process features will reduce the die size of the Pentium II from 203 sq. mm. to about 131 sq. mm. This will be the Deschutes chip and it is 35% smaller than the Pentium II. As the 0.25 micron process ramps up, eventually a 35% cost reduction will be realized, neglecting some cost adders due to the more complex 0.25 micron process. Further, the Deschutes will result in much faster chips. The cost will be down yet Intel can extract higher selling prices for the faster speeds - 350, 400, 450 MHz, while REDUCING prices (as discussed previously) on the older 233, 266 & 300 MHz speed devices. Overall margins should be maintained unless Intel encounters unexpected competition from AMD (possible) and/or Cyrix (not too probable). Paul