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

To: Reginald Middleton who wrote (57292)	6/5/1998 2:51:00 PM
From: Paul Engel	Respond to of 186894

Reginald - Re: "They are overextended somewhere, they are losing money." What a great simplification - thanks for putting it into such crystal clear terms. Paul

To: Reginald Middleton who wrote (57292)	6/5/1998 7:46:00 PM
From: Paul Fiondella	Read Replies (2) \| Respond to of 186894

Good points I think a discussion of the dynamics of the industry would benefit INTC investors. Let me say that I have seen companies that have gone on for years with far worst cash flow positions than AMD (in the biotech industry). They always seem to find more capital. As you have pointed out, once the FAB is built and so long as what it produces isn't obsolete, you can get the money because it is a cash cow if it is run right. There is really no shortage of capital for investment even in a company that is taking AMD's risks. If the Fed were to clamp down and the cost of capital went up, then AMD might suffer. If the market for chips collapsed in a recession then AMD might suffer. But right now AMD has the benefits of a booming economy working against arguments based on cash flow. In other words the prospect of taking some segment of the market away from INTC is an interesting risk. With regard to cost cutting and Celeron, the question is can you sell a less powerful chip from INTC against a more powerful chip from AMD and get your customers to go for it. I'm betting it will not work for Celeron as well as it did in the past (when the Intel 166MHz went up against the AMD 200). Eventually nobody wants (like Paul says of my MEdia GX) an underpowered CPU on their desk when they know they could have gotten something better. The K6-2 will have 3D extensions and a 100MHZ bus and fit onto a non proprietary MotherBoard. The K-7 is a screamer. Its covering a lot of bases. I also take AMD seriously when they claim they will offer more CPU at less price. But the final argument for me in the discussion about the dynamics of operation in the industry is IBM's support of AMD. IBM bought a chunk of Intel to get the next generation processors out the door when Intel needed capital. IBM has to have a viable AMD to gain a price advantage over the DELLs etc. in the corporate box wars. So I think AMD has a shot at it. As an investor I have been in and out of AMD fairly quickly because of all the factors you site concerning cash flow (as well as their inability to get product out the door as promised) plus the ominous big one of being geared up to produce in a recession. IF a recession comes it will hurt both INTC and AMD but possibly AMD fatally. Certainly AMD is not a long term investment whereas INTC is at the right price.