Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Paul Fiondella who wrote (57274)	6/5/1998 12:43:00 PM
From: Reginald Middleton	Read Replies (2) \| Respond to of 186894

This is not necessarily a discussion about AMD as it is a discussion about the dynamics of operation in the industry. <So they have not overextended themselves on the FAB side. Correct me if I'm wrong. They are using other companies excess FAB capacity.> They are overextended somewhere, they are losing money. <As to their cash flow on a long term basis. If they can carve out a market segment they will eventually be profitable in that segment and make money.> The problem with this idealogy is that in reality is VERY hard to realize. When you are making $100 per week and spending $200 per week you are exhibiting negative cash flow. At this rate, the only way to do business is to either eat out of your savings or obtain more money from investors. Investors will charge you a lot of money to compensate for the risk of investing in a losing (cash wise) company. Compound this with a company that has inferior manaufacturing positions and lesser depth of management and the chances of practically priced new investment is unlikely. The scenario is to continue to eat up your savings until you turn profitable. The problem with this is that, unless you have 13 billion in cash like MSFT, you have a very limited time to successfully execute such a plan. The chances of successful execution is further reduced by INTC's constant price cuts ($75 for 300 megahertz Celerons, consistent shifting of the pricing structure of the PII's etx.). The probability of increased price flow is decreased with each INTC price cut, and I just read that INTC is picking up the pace of price cuts considerably. Hence the power of a healthy cash flow.