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

To: Mohan Marette who wrote (44364)	1/8/1998 9:23:00 AM
From: gnuman	Respond to of 186894

Mohan, re: "What Intel might do." I think there are some business misconceptions being posted that imply Intel may retaliate for Compaq's initiative. For example, Engle implied that Intel could give better prices to Compaq's competitors. There are many reasons that this won't happen, most of them legal. I think the FTC and DOJ have heavy oversight on Intel. Anything that smells of retaliation could cause problems. I must assume that Compaq has MFC, (Most Favored Customer), clauses in their Agreement, as all the major customers probably have. This basically states that for like quantities Intel will provide their best price for the product. The companies buying the larger quantities get the lower prices. So I assume that if Intel were to lower their prices to make similar products competitive with AMD's offerings, there is no reason that Compaq couldn't convert back to Intel for these low end PC's, and with their volume advantage get the best prices for Intel product. Sound like a business strategy? I believe that Compaq would prefer to sell Intel based product while penetrating the new low price markets, but they need to address the CPU cost issues. I think they have. The consumer is the real winner in this one.