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

To: Paul Engel who wrote (69725)	12/10/1998 9:20:00 PM
From: TGPTNDR	Read Replies (3) \| Respond to of 186894

Paul Engel, In response to my <Not true. INTC can sell all of the Celerons & low end P-IIs they can make, while they can't market all the upscale P-IIs they are building. I look for a large price decrease in the high speed P-IIs right after 4Q ends to clear out the high priced inventory they are stockpiling to make their increased 4Q earnings numbers.> (Which was posted to another individual on the AMD thread) You Posted <Are you serious?> <This is ludicrous !> <You can't make EARNINGS by stockpiling product.> <You make earnings by SELLING products - at a PROFIT.> ========================================================= I will take this slowly, so you can catch up, Paul. <Are you serious?> At the time, I was making conversation, and semi serious. Your comments prompted me to respond. Your later comments prompted me to post this on the INTC thread(which is where this conversation really belongs anyway!) <This is ludicrous !> Yes, Paul, it is ludicrous that INTC continues to make the high priced CPUS in ratios that the marketplace cannot support. Nonetheless, they have thier production and research schedules to maintain, and buyer be damned. Low priced PIIs are nearly unavailable, while 350s and up are. It is my impression that INTC is down-binning PIIs to try to placate the computer manufacturers, while supplying a minimal number of the low priced chips. <You can't make EARNINGS by stockpiling product.> If the cost of inventory production is less than the inventoried book value, you can indeed make EARNINGS(or at least post a quarter or two of them by stockpiling product! Check your Accounting 101 book. The process can't go on very long, and ultimately leads to one time charges or write-offs, but it can be done for a while! My contention is that the Inventory Value at which INTC is booking the high speed PIIs is greater than their actual cost of production, and greater than the ultimate selling price of those chips plus normal mark-up.(for INTC, if I remember correctly, that mark-up was about 50% last quarter, and anticipated to expand, at least by INTC). We shall soon see, Paul, how well INTC does in the era of the $100.00 CPU. As a point of interest, the following Operating Income of INTC is stated, in each case for the nine months ended, in their September 10Q, as 09/27/97 - 7.494B 09/26/98 - 5.543B Operating Income is normally of the great importance to investors. I wish INTC well, but I think the tide is running against them, and with the continuing competition, perhaps against all the CPU manufacturers, at least for a while. My inherent view is that the cost infrastructure which INTC has built up over the last 5 years cannot be supported under the current, let alone coming pricing structures. tgptndr (More to follow)