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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: StockMan who wrote (26809)	12/16/1997 10:21:00 PM
From: Bill Jackson	Read Replies (2) \| Respond to of 1576360

Stockman, Thanks for the comment. AMD is forcing the pace and this cut will slash Intel harder than AMD. Price competition between unequals always costs the larger company more money as they have 85% of the market and AMD/Cyrix/IBM the 15%. So out of $100 cut from chip profits 85% is Intels and 15% is AMD/Cyrix/IBM. If AMD is 1/3rd, then for each $1 AMD loses Intel loses $19. That sounds right. Intel can afford it, and it denies AMD that extra $ which can build them up within the product life cycle. At this point AMD's stock it in the cellar and Intel will join it in the first quarter next year(when results are out). AMD will almost certainly be so hard hit as to seek a senior partner as I suspect it will need more capital to go to next foundry stages than it has or can borrow once these price cuts work their way into earnings. However at a 19:1 loss ratio(it may not be that high if Intel has lower costs than AMD, a possibility, but they also have very high capital costs for new foundries, and so their cash cost might be lower and their overall higher??) It will be an interesting first quarter. Saturation will set in in all markets except the under $1000 and the Net PC and Web TV stuff, and they are a battle zone of cheap chipmakers with deep pockets in addition to Intel. New hard drive head tech will allow 2 gig and higher to break the $100 mark by mid year with 1 platter? So I hear. So it might be that the whole market will move down. Flat screens are getting cheaper and cheaper, and could pass monitors in a year or two in price performance ratio. The problem is if the market just goes down, it will get smaller in dollars as it gets bigger in numbers and any plateau of saturation will be a killer. So if web TV flops?? or Net PC flops. How are they doing this Christmas in the stores? Web TV and Net PC?? Bill