Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Mary Cluney who wrote (43646)	1/3/1998 8:50:00 AM
From: gnuman	Read Replies (6) \| Respond to of 186894

Mary. re; Intel competing. Of course Intel can compete. But the questions for investors are revenues, margins and earnings. Since early October Intel's 1998 earnings estimates have dropped 13%, triggered by a few pennies miss to Q3 consensus. According to Lehmans figures, the ASP's for PII and P55C are down 40% to 50% from Q3'97 to Q1'98. As an example, Q3 PII 233 = $530, Q1 = $268. (Even the P54C, a very mature product, drops 15-20% over this period). Think about it. The product generating the bulk of Intel's revenues has decreased in price 40-50% in two quarters. This clearly illustrates Intel's ability to compete. And they can go a lot further down the curve while still making money. But in order to maintain historic revenues, earnings and margins I think the market has to shift totally to PII. P55C may have the margins, (even at $130 for a P55C200, or $89 for the 166), but it won't generate the revenues and earnings. It's interesting that the Q1'98 price for a PII 233 is $118 less than the Q3'97 price for a P55C 233, ($268 vs $386). If Intel's earnings were to drop to say $3.50 in 1998, how much is the stock worth. (And that's still a heck of a lot of earnings). Even if they meet the $3.80 predicted by Lehman Bros, what is the stock worth? So, I never said Intel couldn't compete. But the fact they must now compete has implications for the investor.