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To: Burt Masnick who wrote (61219)	7/27/1998 2:29:00 PM
From: Paul Engel	Read Replies (1) \| Respond to of 186894

Burt - Re: "a buildup of inventory at Intel and Intel warehouses are filling with unsold P2's and Celerons. The other side is that there are shortages and P2's and Celerons are in short supply. " The only "shortage" I heard about (that I confirmed with a distributor) was a possible gap in the ordering process. Several distributors delayed purchasing Intel CPUs in view of the upcoming price cuts. Normally, Intel protects their FIRST LINE (Direct) distributors for pricing changes but this protection may have not been passed on through the second and third line of distributors. My gut feel is that Intel has no shortage of CPUs or production capacity at this moment. From a retail perspective, I have seen a LOT of Compaq Celerons for sale (300 MHz) in 3 or 4 different copmuter super stores. Compaq also has a lot of Pentium II machine in these same stores as well as K6-300 machines (not the K6-2, however). HP also has tons of Intel Pentium II and Celeron PCs on dealer shelves, but I also saw one store (CompUSA) with a stack of AMD K6-2 333 MHz machines - my first sighting of these ! The only Cyrix MII machines I saw were in Packard Bell boxes, but these were accompanied by Intel Pentium II Packard Bell machines as well. Paul

To: Burt Masnick who wrote (61219)	7/27/1998 2:36:00 PM
From: Paul Engel	Respond to of 186894

Burt and Intel Investors - Intel's Price Cuts and 450 MHz Pentium II Here is the first "Post-Cut" story on Intel's pricing and products. Paul {==========================} news.com Pentium II prices cut, 450-MHz chip due By Michael Kanellos Staff Writer, CNET NEWS.COM July 27, 1998, 10:55 a.m. PT update A new round of price cuts arrived from Intel, while a 450-MHz chip--the fastest Pentium II yet--should hit the streets next month. The reductions are the latest in this year's flurry of pricing activity by the chipmaking behemoth. The July round is the fourth desktop processor price cut in 1998, and at least two more are scheduled for September and October. Both will likely be deeper than estimates from the early part of the year. In past years Intel cut prices four times in the whole year. Intel maintains the cuts and last week's forwardly revised release date for new Celeron processors stem from better-than-anticipated results in rolling out its most advanced commercial production process, referred to as the 0.25-micron process, but various analysts have said that excess supplies of PCs and processors as well as slower demand have also conspired to drive down prices. In addition, Intel is feeling pressure from Advanced Micro Devices, which has been rapidly gaining market share in the hot sub-$1,000 computing segment. An AMD spokeswoman stated that, AMD can be expected to follow with cuts that will put its processors at 25 percent below equivalent Intel chips. Expected sooner rather than later, the 450-MHz Pentium II will follow today's price cuts and appear in time for the "back to school" computer buying season, according to an Intel spokesman. Sources say that means a release in August. The fastest Pentium II will come out at a price of $655 in volume quantities, according to the sources. Some retailers are already booking advance sales for the chip at $779 in single-lot quantities. While this price will make the 450-MHz version the most expensive Pentium II, it will cost less than earlier anticipated. In the spring, the 450-MHz chip was expected to debut for a price of $776, according to an analyst at Technology Business Research. Last month, the debut price was estimated at $669 by the consulting group. The debut price will also be lower than the historical premiere price of Intel's high-end chips. Just a year ago, the 300-MHz Pentium II was dropped from $1,900 to $850, for example. The prices listed above apply to 1,000-lot quantities and are available to circuit board vendors and other wholesale purchasers. Prices are lower for large-volume computer vendors, with discounts reaching as high as 15 percent, according to some analysts' estimates. Ashok Kumar, an analyst at Piper Jaffray, expects the 450-MHz chip will probably sell for around $625 to vendors in large quantities. Single-lot retail prices for consumers, of course, will be higher. Although cuts reduce revenue, the most recent round has stimulated demand. "The PC market picked up in June driven by Intel's price cuts and the release of Windows 98," Dan Niles, semiconductor analyst for BancAmerica Robertson Stephens said recently. The stimulated demand, combined with the reduction of PC inventory and the fall's traditional seasonal uptick, could mean a good second half, Niles added. Mark Edelstone, semiconductor analyst for Morgan Stanley, also remains bullish on second-half demand, stating earlier that price cuts boosted June demand and will likely continue their magic in the second half. Nonetheless, Morgan slightly lowered its 1998 and 1999 earnings estimates in June because the September and October price cuts may be deeper than earlier anticipated. PC makers will see more sales from price cuts, but will have to fight for unit growth rates two to three times higher than the industry average to sustain total earnings, said Kumar. "Prices are dropping through the floor and it will only get worse," he said. By the first quarter next year, the 350-MHz Pentium II machine will be hovering close to the $1,000 price point. Celeron prices are also being slashed in anticipation of two Celerons containing integrated high-speed cache memory that are now coming in August. Intel is an investor in CNET: The Computer Network.

To: Burt Masnick who wrote (61219)	7/27/1998 2:48:00 PM
From: Paul Engel	Respond to of 186894

Burt - Perhaps this article may explain a "possible" shortage of Intel devices. Paul {==================================} news.com Hong Kong fiasco for Intel cargo By Reuters Special to CNET NEWS.COM July 27, 1998, 9:40 a.m. PT PORTLAND--Intel logistics have suffered a "significant impact" from the cargo fiasco at the newly opened Hong Kong airport, prompting a partial shutdown at two plants, an executive said here last week. Computer problems at the new Chep Lap Kok airport have caused chaos and long delays since the airport opened on July 6. Intel, which has several facilities in Asia, has unable to ship its goods on a routine basis. "Millions of dollars worth of goods are stuck in the supply chain," Grant Keyser, Intel's western regional traffic manager, told a group of airport and cargo executives. Because of the difficulties, two manufacturing facilities have lines down, hurting production, he said. The Santa Clara, California-based chipmaking giant rarely closes down its production lines, although earlier this month Intel temporarily halted work at two Oregon plants. That stoppage was part of the company's effort to reduce supply in the marketplace. "Basically, we are responding to market conditions," Bill MacKenzie, a public information officer at Intel, previously told CNET News.com. To work around the Hong Kong problems, Intel has begun using integrated carriers with their own ground handling crews. "This has pushed freight costs way up," Geyser said. "Our forwarders have suggested using sea to nearby points, but we hesitate to get into that," he told those attending the cargo seminar sponsored by the Airports Council International and the Cargo Airline Association. To support its $25 billion microprocessor and systems business, Intel's freight cost will be more than $300 million this year and costs are projected to be more than $500 million by 2000, Keyser said. Intel expects to ship 45 to 60 million kilograms by air this year. As part of the same address, Keyser said Intel is looking to expand its transportation and logistics network in Latin America. "Latin America is one of our highest growth markets and we have very little logistics to support that growth." When selecting a transportation/logistics provider, security is Intel's most important requirement. "Security is No. 1 because of the value of our product," he said. Intel also is working to reduce freight costs. It has teams reevaluating distribution networks and strategies. Intel is an investor in CNET: The Computer Network. Story Copyright c 1998 Reuters Limited. All rights reserved. Tech Talk... Join the discussion! Go to Front Door \| Computing \|