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

To: Patient Engineer who wrote (44139)	1/6/1998 12:39:00 PM
From: John Puffer	Respond to of 186894

good comments. regarding win98 needing more cpu - that may be true, intentionally. msft and intc work in concert. have you seen outlook - great tool, great interface, but SHOCKINGLY SLOW on a pentium/mmx chip. it needs pentium ii. intc drops prices, msft comes out with new software that needs the new power - wamo! upgrade time! hoping for good news next week...

To: Patient Engineer who wrote (44139)	1/6/1998 12:52:00 PM
From: derek cao	Read Replies (1) \| Respond to of 186894

Re: but Intel is stuck with 3M unsold chips If you reread the article, inventory is mostly old chips. Tillamook are selling well. I just checked out dell's back order list. Notebook P233MMX is there. Based on intel's current pricing practice, the 3M unsold chips will make a good case for intel to cut portable P166 and below CPU's price. A very good welcome gift to CPQ's non-intel notebook introduction. Re: . A 300MHz P2 is not that much faster than a 200MHz PMMX for most tasks You can make the same case with P120 and P200MMX, but nobody sells and buys P120 anymore. It is the peak performance matters, not the average performance. IMHO, as long as global economy holds, intel is pretty safe investment. derek

To: Patient Engineer who wrote (44139)	1/6/1998 12:56:00 PM
From: Paul Engel	Read Replies (3) \| Respond to of 186894

Patient Engineer - Re: " but Intel is stuck with 3M unsold chips (mostly the expensive laptop chips). " Since you haven't bothered to analyze the siginficance of this number, I will repost my interpretation. You act as if the 3 million chips is some sort of Titanic Disaster - producing at the rate of 22.8 million CPUs/quarter, how much inventory would you expect Intel to have - ZERO? {==============================================================} Re: "Intc sitting on a inventory of 3million unsold processors...." Let's put this number into perspective. That article and a related one (from Ashok Kumar - news.com ) stated that Intel also has achieved a quarterly sales rate of 22. 8 Million CPUs: {======================} "Intel has an inventory of about 3 million in unsold processors, due to "massive cancellations of notebook chips," according to Ashok Kumar,"... "We forecast microprocessor units to have grown about 5 percent sequentially and 14 percent from the year-ago period to 22.8 million. Microprocessor ASPs are expected to have recovered from the depressed level of $215 in the third quarter to about $240 in the December quarter." {=======================} So what is 3 million processors? 3,000,000/22,800,000 = 13%. In a 13 week quarter, this represents 1.7 weeks worth of production. With Intel's two major customers - Compaq and Dell - both using BTO (Build to Order) manufacturing techniques - and HP and IBM and Gateway quickly following, Intel needs to be able to ship large amounts of CPUs FROM STOCK on a moments notice. Does a 1.7 week's worth of inventory seem like a lot? Let's look at it from a financial standpoint. Intel's annual report, and Investor Relations personnel, have verified that Intel values Finished Goods Inventory according to the lower of either the cost to make the goods or the current market price of these goods. Assuming that Intel's costs are lower than the current selling price - let's assume a rather HIGH cost - $100 per unsold CPU. My own estimates are much less than this less but for now, let's use the $100/CPU cost of manufacturing. That 3,000,000 CPUs in inventory has a value of $300,000,000. According to Intel's Q397 earnings report, Intel had $401,000,000 in Finished Goods Inventory as of the end of September, 1997. Thus, the $300,000,000 inventory represented by the 3,000,000 CPUs in Finished Goods Inventory represents ONLY 75% of Intel's Finished Goods Inventory as of 3 months ago! Now for the moment, let's assume that ALL INTEL'S FGI INVENTORY is CPUs - that means that Intel's Inventory HAS BEEN REDUCED BY 25% in the past 3 months! Clearly, that is not a valid assumption. However, let us now assume that CPUs account for 75% of Intel's business. Would it not be valid to assume that 75% of their FGI is CPUs? And wouldn't the $300,000,000 CPU inventory in Finished Goods account for 75% of the previous quarter's $400,000,000 FGI total? I think 3,000,000 CPUs in FGI might be a reasonable number under these circumstances and interpretations. Paul