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

To: Thomas G. Busillo who wrote (62927)	8/20/1998 11:04:00 PM
From: Jules B. Garfunkel	Read Replies (2) \| Respond to of 186894

Tom and All, The thrust of most of Tom Kurlak's downgrade this morning was his contention that Intel's ASPs would continue to decline another 33%. In my opinion, an outrageous assumption. An assumption, that no one that I read today, called him on. He wrote, "Gross margin has fallen by 15 points with a 24 % estimated ASP decline over the past year. A further 33 % ASP decline surely would put additional pressures on gross margins." Well Tom would be correct if that came true. A 33% decline in Intel's ASPs certainly would put additional pressures on Intel GPM. However, how and where did Kurlak come up with his 33 % decline in ASP number? Does he really believe this number to be realistic? In addition, Kurlak had to have been aware, when he used the 15 point decline in GPM, that he was using an aberration at the high end at 63 %, (which occurred in only one quarter), with an abnormally low quarter of 49 %, at the other end. Further, Intel has stated several times, (most recently less than a month ago), that they expect GPM for the full year to be around 52 %. But Kurlak, once again chooses to ignore Intel's guidance. Later in today's report Kurlak conjectured, "Using a $330 price for standard high volume server chips (and 3 processor per box), together with about $175 for the mid-high end PC processors and $30 for the low end PC processors, estimated five years from now, yields total microprocessor revenues of $26 billion in five years." Now I don't claim to be an expert on future pricing, and perhaps someone else might comment, but I have been under the impression that future high volume server chips would sell for more than twice what Kurlak is using, or about $750 plus per chip. Further, I have been using 4+ as the number of processors per box. Didn't Intel tell us just a few months ago that revenues from their Server business alone was forecast to exceed $25 billion within the next four years? No, I don't understand why Kurlak puts out what seems to be intentionally misleading reports on the Eves of option expiration days, or how Intel, the media, and other analysts, let him get away with it. Jules