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

To: Paul Engel who wrote (39550)	11/8/1997 11:16:00 AM
From: Jules B. Garfunkel	Read Replies (3) \| Respond to of 186894

Paul, I call your attention to my, exchange2000.com "---Intel's raw materials inventory and finished goods inventory were actually down sequentially in Q3, despite revenues increasing sequentially. The only reasons that I can come up with for this phenomenon was that Intel made an inventory adjustment in the quarter. This I believe was done so as to accelerate moving out older classic Pentium's, and to adjust to their OEM's new "build to order" manufacturing model, (i.e. CPQ following a Dell method of manufacturing). Further evidence of this can be found in the decrease of Intel's average-days-sales-outstanding, by 4 days, to 43 days from the previous quarter. Therefore, both of these reasons would seem to suggest that the inventory adjustment was an aberration and a one time event that should not carry forward into future quarters. In my estimation the 9 % reduction in average-days-sales outstanding probably accounted for another 5 cents in Intel's earnings shortfall for the third quarter. Intel's raw materials inventory and finished goods inventory were actually down sequentially in Q3, despite revenues increasing sequentially. The only reasons that I can come up with for this phenomenon was that Intel made an inventory adjustment in the quarter. This I believe was done so as to accelerate moving out older classic Pentium's, and to adjust to their OEM's new "build to order" manufacturing model, (i.e. CPQ following a Dell method of manufacturing). Further evidence of this can be found in the decrease of Intel's average-days-sales-outstanding, by 4 days, to 43 days from the previous quarter. Therefore, both of these reasons would seem to suggest that the inventory adjustment was an aberration and a one time event that should not carry forward into future quarters." In my estimation the 9 % reduction in average-days-sales outstanding probably accounted for another 5 cents in Intel's earnings shortfall for the third quarter. on the INTC thread. In that post which was written right after Intel released Q3 earnings, I discused the JIT adjustment, in addition, to other observations." I have often discused on SI, my opinion that the job of the long term investor is to identify aberations in the "market". By that I mean that investors should look for when the market misinterprets a past, or future event. I believe this was this same thing that Ibexx was saying yesterday in her post #39506 , recommending investors focus on the long term fundamentals and not short term market fluctuations, or manipulations. Therefore, as I have posted over the last week, I have been buying INTC Calls, trying to take advantage of the fact that I believed that analysts had misinterpretated Intel's inventory situation. This misinterpretation has now, hopefully, been clarified by Intel. Going forward analysts should recognize that JIT manufacturing was a short term phenomenon. An event which over time will have a positive impact on Intel, and was in no way an indication of weakening demand, (as had been almost univerally interpreted by other analysts) Regards, Jules

To: Paul Engel who wrote (39550)	11/8/1997 3:28:00 PM
From: Gary Kao	Read Replies (2) \| Respond to of 186894

Could it be that Intel has lost some market share to account for some the disparity b/t growth of overall market & Intc CPU shipments? For example, Cyrix dumped their chips at cost to clear out inventory (big nasty surprise coming for NSM accountants!). gk >A second factor related to inventory was also discussed. Intel claimed that the OVERALL PC market grew FASTER than Intel's CPU shipments for most of 1997. The implication here is that many customers were working off a bloated inventory, selling more PCs than the number of CPUs ordered from Intel.

To: Paul Engel who wrote (39550)	11/8/1997 5:08:00 PM
From: Lee Penick	Read Replies (1) \| Respond to of 186894

Paul, Re - "Lee - Re: "Why is JIT or "made to order" causing so much stir now?" This matter caused quite a stir and deserves some explanation." You and PT both provided excellent explinations. Thank you. I can certainly see the financial benefit to the box makers. I see this as a negative for AMD, since they don't have good production and reliability for BTO/JIT to work well. If I was selling their product, and they had trouble manufacturing and delivering, I would want a larger inventory to see me through their inconsistencies, or better yet, just buy from Intel! Thanks for remimding us all about the Scientific American edition on Microprocessors. Just picked it up this morning. Will take a while to read it all, but, hey, the pictures look really good so far!!! Thanks again for all you add to this thread. The old adage, "don't invest in what you don't understand" .... if it wasn't for you, a couple of us might be excluded from investing in Intel. Lee ps, hope you accept the ICQ invitation I sent you several days ago.