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

To: Tony Viola who wrote (56340)	5/29/1998 10:28:00 PM
From: John F. Dowd	Read Replies (1) \| Respond to of 186894

Here is what Barretts take is on it.Intel pushes back next-generation chip to mid-2000 (adds Intel CEO comments, analyst comments) By Therese Poletti SAN FRANCISCO (Reuters) - In another dose of bad news from the world's largest chip maker, Intel Corp. said on Friday it is delaying production of its much-anticipated next-generation chip, code-named Merced, by about six months. Intel said it told computer-maker customers that it will delay volume production of the microprocessor -- the brain chips of computers -- to mid-2000 from the end of 1999. Intel said it under-estimated how much time it needs to test the chip before it can ship it in volume to customers, who plan to use the microprocessor in high-end workstations and servers, the machines that run computer networks. Intel chief executive officer Craig Barrett said the chip giant is disappointed with the six-month delay, but said Merced will still be a ''real winner when it gets to the marketplace.'' ''It's a big deal anytime our programs slip,'' Barrett said in a phone interview. ''It's unfortunate... We are still very excited about Merced technology. We are still very happy with ... the general acceptance in the marketplace.'' Barrett also emphasized that the delay is not a design issue and it should not have a big impact on the chip's competitive advantage in the marketplace against Digital Equipment Corp.'s Alpha processor and others. ''If I were to label the issue, it's one of program management and getting all the bits and pieces pulled together in the right order,'' Barrett said. ''We are still very hot on the technology...I don't think a six-month slip is a major impact from a product standpoint.'' Barrett pointed out that Merced is only the first in a new line of at least three processors and that the other two follow-on chips have stayed on schedule. ''This was a second half 1999 deal and even then it was a product introduction so the revenue is going to be a small piece of the Intel total revenue at that time frame,'' he said. Still, the product delay is more bad news from a company that is currently seeing flat revenues and profits under pressure from falling prices. The company is also expected to soon be the target of a Federal Trade Commission lawsuit, alleging misuse of its monopoly position in the market. ''It's just one more thing in a stream of bad news for this sector,'' said Bill Milton, a Brown Brothers Harriman analyst, adding that he will not cut his earnings estimates as a result of this news. ''Psychologically, it will have a bigger impact.'' Intel made its announcement after the U.S. stock markets were closed. In after-hours trading, Intel was off $2.0625 to $71.4375, according to the Instinet system. ''This is not good news for anybody except for (Digital's) Alpha and I suppose for Sun (Microsystems Inc.),'' said Michael Slater, editorial director of the Microprocessor Report, an industry newsletter in Sebastopol, Calif. ''It's very disturbing news for the near-term success of Merced...It makes it less likely that it will have strong performance right out of the gate.'' The delay is seen as having the biggest impact on Intel's partner in development of Merced, Hewlett-Packard Co., which has plans to use the chip architecture to replace its own PA-RISC architecture in its high-end workstations running the multi-user UNIX operating system and servers. Santa Clara, Calif.-based Intel has been working for several years with H-P on the chip and its new architecture design, which will be Intel's first architecture to diverge from its x86 microprocessor series. Workstation maker Silicon Graphics Inc. also recently embraced Intel's architecture, after years of designing systems around its own MIPS chips. Merced will be Intel's first to use a 64-bit instruction set, to process more computing instructions, versus the current 32-bit instruction set in the higher-end Pentium II. ''Now everyone else has nine more months to get caught up,'' Slater said, referring to Sun Microsystems Inc and its Sparc processor and Digital and its next upgrade of the Alpha chip. Intel chips power nearly 90 percent of PCs worldwide but Merced was not expected to be in widespread use in the mainstream PC market for several years. Merced and its follow-on products is intended to help Intel make inroads into the high-end computer market. Analysts said they had expected volume production of the Merced chip sometime in the latter half of 1999, but that they had not predicted that Merced would move into the mainstream PC market until at least 2001 or beyond. Intel said it has defined its architecture for the chip, and it has completed the model and physical layout in software form, but it has not yet created a working silicon version. Translation = There won't be any software ready for it when it comes out so what's the rush. As you say Tony it is a different chip we are not talking about clock rates in the cpu and on the bus we are talking about new machine language. But the other day everyone was telling me just how much the world was ready to jump on this thing. I am hoping that INTC will do well by becoming more efficient i.e. better yields, new applications beyond the PC, etc. because this transition isn't going to be like going from MMX to PII. It is a real quantum leap and maybe there will be no one there to catch it as it lands. JFD P.S. I am very long INTC

To: Tony Viola who wrote (56340)	5/30/1998 9:19:00 AM
From: rudedog	Respond to of 186894

Tony - Great post. I think everyone in the industry who was looking at the related merced factors (OS and compiler work, and tools development in general, and also getting the 'big apps' like database engines to run 64 bit native) were already looking at a mid to late 2000 schedule. In my mind this is more Intel acknowledging that merced launch requires a much broader industry partnership than previous IA32 launches, and that Intel can only affect the schedules they control (i.e. fabrication of merced and its support silicon). This will probably result in a much more stable and usable first merced product from Intel, and is as you say really a rationalization of the schedule risk. Now Intel has to shift to getting a broader '64 bit' position accepted as the industry standard, so that the OS and ISV community will devote appropriate resource to the effort. If they do that successfully they will be at the same place in mid-2001 as they would have been by pushing an earlier launch, with a much higher degree of confidence and participation in the industry.