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

To: Khris Vogel who wrote (48342)	2/21/1998 8:59:00 AM
From: Joseph J Randazzo	Respond to of 186894

FWIW << Intel's stunning rise? "There is a reluctance by the market to accept the reality that this company is no longer growing," says Kurlak. "People have been buying because of the absence of bad news." >> Is this guy in a coma? << What the market isn't taking into account, he says, is the fact that prices for Intel products are falling -- and fast. Even growth in the overall number of chips sold can't make up the difference, he says. "For 12 years, average selling prices were up 8% every year; now they are falling," he says. So, even with its much-ballyhooed introduction of the Pentium II processor, Intel hasn't been able to drive revenues higher thanks to price cuts across its product line. What's more, the popularity of the sub-$1,000 computer promises to pressure Intel margins further. For PC makers to make money on cheap computers, the microprocessor -- the most expensive part of the PC -- has to cost around $80, far below the $200 that Intel currently gets on average for its chips. Asks Kurlak, "As the sub-$1,000 computer becomes a bigger part of the PC market, the question you have to ask yourself is how long until Intel's average selling price is $80." >> Lowering the entry level threshold expands the customer base and once they get bit it's only a matter of time until they crave more speed and power. << And, while Intel bulls like to point out that improved manufacturing processes are making it possible for Intel and others to produce more chips from ever-smaller silicon wafers, Kurlak says that will only make the chip oversupply problem worse and push prices lower. >> This might be true if there was another company out there that was capable of the same yields, manufacturing process, and performance. Is this guy saying that Intel will overproduce and kill their own margins? This is not DRAM. << At the heart of Kurlak's worry about Intel is the idea that consumers and businesses have fewer reasons to upgrade their computers these days with the kinds of powerful and expensive chips that Intel likes to produce. In the past, Intel was able to come up with new chips that were needed for high-speed applications like Windows 95 and computers games, but these days there aren't as many new processing-hungry applications that people are demanding. "Once you have a 100-megabyte ethernet on the desktop, or cable modems or desktop video conferencing, you will need more processing power, but that's down the road," he says. "Until we have a demand driver for processing speed, people are looking for an improvement in cost per bit and cost per unit of processing power, which translates to lower prices in the near term." >> "Down the road",,,about a block away. As pipeline and bandwidth become available to the business and consumer community it will once again raise the bar and demand for faster processors and multimedia capability. Cable modems are her in New Jersey. How long before I can watch the NFL on Sunday in one window on my PC, with a videoconference with Mom in another, and high speed access to 3D web sites. Intel is changing America and the world. I bet Kurlak's great-grandfather was an auto analyst who scoffed as to why anyone needed more than a Model T Ford. Technology moves on. Intels stock has it's ups and down but to tell people not to buy it a diservice to their best investment interests. Go back on the charts, and start anywhere, and go forward three years. How much would one have made/lost. Thanks Intel. Long since Oct '95. Bought more in November thanks to genius' downgrades. Thanks Tom : ) Joey R

To: Khris Vogel who wrote (48342)	2/21/1998 9:08:00 AM
From: otter	Read Replies (1) \| Respond to of 186894

An alternative view on the subject of speed versus demand. One of the points of the article is that there isn't really much of a driver for higher speed computers. If your view is of the horsepower required to run Win95, Office95 applications at work; and basic run of the mill checkbook balancing and basic, modem speed limited websurfing kinds of things at home, Thomas Kurlak is probably not wrong. My view is a little different. On the consumer end, I see that we are at the cusp of a transformation in which different media - voice, video, imagery - that have information content - have the same kind of value to people as has text; and I submit that this new media environment is in fact, coming on stream faster than many of us might realize; and will continue to drive demand for microprocessors capable of handling that new media, bandwidth that can carry it, and storage that can hold it - and is doing that now. I've just installed Via Voice - a lower end continuous voice to text system - on my PC; and the long and short of it is that my juiced up 2 year old 133 can't keep up. Because it can't keep up, I can't use it to its fullest potential. To the point he made about video on the desktop and bandwidth as a driver..... How many of you have seen and heard some of the RealVideo, VDO, and other video streaming offerings on the Internet? With that technology today, bandwidth is the limiting factor for most of us; that basic old 100mhz system can play a 20kbs stream with good audio at around 6 or 7 frames per second in a window approximately 2 inches square with a little bandwidth left over for other things. Now, lets assume something a little different - oh 15 frames per second, and a half page display. Bandwidth required is up to 400kbs. I can encode a stream that that bandwidth using a twin 300 system today; and I can distribute it today, but that little old 100mhz system you have that does Win95 and Word doesn't have the gas to play the stream and do anything else. Who is providing that bandwidth? Cable companies. ADSL providors. DirecPC...... And, oh yes, corporate LAN users. IMO, this environment isn't as far down the road as Mr. Kurlak seems to be projecting. Who wants to provide continuous streaming video at 400kbs? Well, I do; and if I can, then I have an immediate potential worldwide audience of.... well a lot - for a whole lot less $ than it would take me using traditional methodologies..... The point is that in technology, capacity in advance of critical demand (shortage) always gets soaked up by people using things that take advantage of that capacity - often a lot faster than people would have forecast. Moreover, as one limit is overcome, increasing demand highlights other limits that when overcome highlight even other limits that get overcome.... and the cycle continues. On the producer side, there are also transformations occurring. Not that long ago, if I wanted to produce good quality graphics or if I wanted to be in a desktop publishing world, I was probably a Mac user. If I wanted to do dynamite graphics, CAD, 3D, animation, and the like, I was probably a Sun or SGI workstation user. The reason was that PCs didn't have the gas or the graphics capabilities that would support the requirement. Today, that just isn't true. I can buy a perfectly well equipped PC at the high end with the software I need to do most of these tasks for a lot less $ than I would pay if I wanted the platform to be one of those other brands. As a business person, if one of my engineers or graphic artists came to me with a requirement for a new workstation (assume, for example, it's a Mac), my question back to that person would be to explain why a PC wouldn't be able to do the same job. Increasingly, I think, users are going to fail at justifying the premium required by those other brands of workstations; and that at the end of the day, it will be a PC purchase. So. Is Mr. Kurlak wrong? On balance - it really doesn't matter! I've heard these kinds of comments for 30 years....... And, they have all been wrong. The only two questions, in my mind are (1) how fast capacity becomes inadequate, and (2) what's going to soak it up?

To: Khris Vogel who wrote (48342)	2/21/1998 1:24:00 PM
From: Paul Engel	Read Replies (2) \| Respond to of 186894

Khris - Re: Kurlak Thanks for the post - iy has been discussed for a while. Kurlak assumes Intel is adrift, subject to the whims of low end failures such as AMD and Cyrix. Being a mere Wall Street Wag, he is not aware of Intel's real capability in creating, deploying and profiting from advanced technology. On another note, I would guess that Kurlak believes that He, Kurlak, has in the past been responsible for Intel's good fortunes in the stock market. That being the case, Kurlak naturally assumes that he (Kurlak) will also dictate that the game is over for Intel. Funny - Intel doesn't appear to be listening. I'm sure it never even entered Kurlak's mind that perhaps Intel has been responsible for Kurlak's past successes. Paul