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

To: Christopher White who wrote (45708)	1/15/1998 8:51:00 PM
From: Jules V	Read Replies (1) \| Respond to of 186894

Although the company said that its overall profit margins would decline to 55 from 60 percent next year in a conference call with analysts yesterday, observers believe that the company has more room for price movement than the projected decrease might indicate. The decline in margins, said many, comes as a result of the new additional chip packaging that comes as part of current Pentium IIs. The gross margin on the microprocessor core remains close to, or above, 80 percent, analysts said today. By removing the pricey packaging on some processors and introducing new high-end chips--both of which will occur in the second half of this year--Intel can effectively maintain its average selling prices (ASP) and subsidize steeper discounts on processors and hence completed desktops--the latter a boon for users. In turn, such discounting would force other processor makers, and computer makers, to follow suit. (Intel is an investor in CNET: The Computer Network). "The gross margin issue is a product transition issue," said Ashok Kumar, an analyst at Loewenbaum & Company. "ASPs will stay the same in 1998." The product shifts that will fuel the cuts will occur in the year's second half, after Intel releases the "Deschutes" processors, the next generation of the Pentium II. news.com