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

To: Steve Porter who wrote (57662)	6/9/1998 3:29:00 PM
From: Paul Engel	Read Replies (2) \| Respond to of 186894

Steve - Re: "But my whole argument is that Intel wouldn't have had to give up market share because AMD and Cyrix just can't produce enough chips to threaten Intel's massive production. " Cyrix has IBM's foundry at their disposal. AMD stated they had the ability to make 15 million to 20 million CPUs per year (as of last year) with Dresden Fab 30 under construction and a goal of taking 30% market share. AMD now also has IBM's foundry at their disposal. Intel did what any successful company did - they protected their market share while accepting a hit on profits - while still maintaining profits, but at a lower level. Intel's stock has taken a hit - that's the jeopardy of investing in technology stocks. However, if Intel's strategy is successful - and so far indications are that it is (with AMD and Cyrix financially crippled) - there will be a good payback to the patient investor. Paul

To: Steve Porter who wrote (57662)	6/9/1998 4:07:00 PM
From: Larry Loeb	Respond to of 186894

Steve, Cyrix's strategy (which was followed by AMD) was to create a market niche where they could have an advantage. Had they been able to successfully implement this strategy, they would have established themselves as the leading CPU supplier to the under $1,000 market. They would have then attempted to position this market as the mainstream market, cannibalizing the established PC market. Eventually, this could have led to Intel being marginalized at the high end. Acting as a (rational?) paranoid competitor, Intel devoted resources to counter this threat. They did this, at first, by not obsoleting their older processors as rapidly (while rapidly bringing out higher end processors). This created a lower priced Intel line which could be sold profitably, while minimally impacting their higher end product. This counter-strategy benefited from the positive image that Intel had gained through the Intel Inside program. Meanwhile, Cyrix was unable to produce a product that would be widely accepted (they had production problems and problems selling to the OEMs - who weren't convinced of the potential for this lower priced market). Based on this analysis, it would have been irresponsible for Intel to not go for this market, even at the expense of their margins. Just my understanding. Larry