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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: kolo55 who wrote (3857)	4/15/1998 10:23:00 PM
From: jeffbas	Read Replies (1) \| Respond to of 78816

Paul, some of these same issues face our favorite ECM stocks as well, specifically declining ASP's. Of course they benefit from the continuing trend toward outsourcing. Question for you: If JBIL assembles one board for $100 now or two at $50 three years from now, what happens to the profits? In other words, do you know how JBIL compares with Intel which is facing a similar situation?

To: kolo55 who wrote (3857)	4/16/1998 8:11:00 PM
From: Andrew	Read Replies (2) \| Respond to of 78816

Interesting point on any valuation (eg. intel) For the last several quarters its gone on unnoticed (until now by mgmt) that intel has been growing its work force at substantially faster pace than sales. Further S,G&A wasn't growing as fast as work force. So I asked where were the bodies being buried? It seems most of these fixed costs were going into production and thus COGS. So what's the big deal, you ask? If more and more fixed costs are going into COGS, the "operating leverage" of Intel rises to levels not seen since intel small early days. Operating leverage is no different than financial leverage in that it increases volatility of earnings. The point I am making is that the predictability in intel's earnings has been deteriorating for some time. Hence, the continual earnings misses. Intel is much more susceptible to volume shifts than it has been in a decade. Most analysts give lower multiples to debt-laden companies for this reason. few tech analysts have any clue on cyclical industries and why they get lower multiples. thus they have and continue to miss the point that intel with much higher operating leverage (hidden in its COGS) is a more cyclical company than ever before and where it is in cycle deserves much lower multiple!

To: kolo55 who wrote (3857)	4/19/1998 3:50:00 PM
From: rich evans	Respond to of 78816

The value of Intel is difficult for me. If character of a company effects value then Intels character is well documented by the Judges opinion in the Integraph Lawsuit which is worth reading: intergraph.com This opinion also shows however that Intels products are now becoming more proprietary and how difficult it is to compete especially with the chip sets, buses, sockets and graphics all needing compatibiltiy and the cost and time to develop all of this so Intel may well have a lock. As to lower tech chips, how long before the low end boxes and other TV devices etc need high tech chips to handle all the requirements of voice and video etc.And Intel has most of the Fabs/production and the proprietary designs of all these chips and subsystems. With 6 month product time and capital required it will be hard to compete. But then the NT 5 is supposed to be designed to work with the Alpha but DEC indicated that Alpha Machine sales are down another 4%.I thnk Analyst estimates for INTC therefor are wild guesses. The value of intel arises for me because in May the 2001 leaps become available and if INTC stay in the low 70s one could i.e. sell a $100 put and get about $28 a share right away.But if you are right and MPUs go the way of DRAMS then...And if INTCs customers and others can break the INTEL Lock and Planned Lock of Merced then...I am sure if they could they would based on no love for Intel. CPQ may be thinking ahead this way once it gets control of Alpha with the NT5 OS.One cansee why Intel keeps investing in other companies such as the graphics designer Chips and TEch etc.I'll probably pass on these puts but it is hard to forecast I think where this is all going" a year or two ahead. Rich