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

To: Fred Fahmy who wrote (67206)	10/22/1998 7:11:00 PM
From: Scumbria	Read Replies (1) \| Respond to of 186894

Fred, It is ridiculous to think that they would have had no share and no customers had they only priced 10 or 15% below Intel. Compaq may not share your point of view. They have to sell AMD based products at a discount, and make money. There is no motivation for OEMs to use a non-Intel processor, unless it is deeply discounted. Scumbria

To: Fred Fahmy who wrote (67206)	10/22/1998 8:10:00 PM
From: kash johal	Read Replies (1) \| Respond to of 186894

Fred, You make some great points but I think you are missing the realities of the semiconductor industry. AMD (and any other leading semiconductor company) has major capital investment costs. To ship leading edge CPU's requires a leading edge process-period. As CEO you launch a huge design effort and plunk $1-2Bn in a new fab. Then you try to sell some design benefits at 10% lower price than the dominant player. Your Fab is running at 10% capacity and you are losing tens of millions of dollars/quarter. Now Mr. Business expert what are you going to do. Besides getting fired pronto, you might then want to ramp up your fab. and tell the sales guys to book business to get the fab running at anywhere close to capacity. AMD will ship 5M CPU's this quarter and have fab 25 running close to capacity. They will make money this quarter. They will be pretty close to intel's highest speeds by end of quarter. They will have a reasonably competitive K-3 in Q1 99. Your business strategy is eminently reasonable for a different business but not for the high paced CPU battle. Another CEO decided on a low key CPU entry with a niche strategy and got into the CPU business for around $100M. Then they built a 0.35 micron fab to build it. That company is IDT. Their speeds have been too slow, and they have sold 100K pcs/quarter. They went and tried the low cost, slow easy niche product and have been absolutely killed. They now have no products and an empty 0.35/0.25 micron Fab. In fact they took a $200M write off this quarter. This for a company with a market cap of <$500M. This is a tough business with some very tough competitors. Jerry Sanders has actually done quite well through some very difficult times and AMD is positioned as well as it ever has since the 486 days when AMD had 50% of the CPU market. Profits(however meager), leading edge fabs with capacity to capture 40% market share, high speed CPU's, and a list of blue chip OEMS Compaq, IBM, HP, Acer etc. Regards, Kash