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To: Jeff Fox who wrote (71268)	1/12/1999 8:46:00 PM
From: Fred Fahmy	Respond to of 186894

Jeff, Thanks for the summary. EOM FF

To: Jeff Fox who wrote (71268)	1/12/1999 9:53:00 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 186894

Jeff, Thanks for the fantastic CC notes. This is what makes SI such a treasure. Brian

To: Jeff Fox who wrote (71268)	1/13/1999 11:59:00 AM
From: Tony Viola	Read Replies (2) \| Respond to of 186894

Hi Jeff, great CC notes, thanks. You beat me to it, running busy yesterday, working stiff, you know. I did pick up a few tidbits you didn't mention, so I'll fold'em in where they fit into yours: Andy Bryant highlighted continuing cost reduction resulting in increased product margin. He cited lower "purchased component" cost as the major factor. (This translates to fewer purchased cache SRAMS). Bryant also mentioned in opening remarks that higher revenue in 4Q and product mix were responsible for the better GM (as well as continuing cost reduction and less purchased components). WRT purchased components being a drag previously, he said no more effect of that at all. Otellini opening: Europe growth highest of the sectors, He also said US and Latin America ;-( were up. Japan blah. Otellini said (with vigor) that Intel has an extremely strong product lineup going into 1999. He said distribution level are within limits (no inventory problem). Later talk of trying to build up inventory. For Mobo fans, highest shipments for 8 quarters. From the questions Bogin(sp?): Why down in Q1? Bryant: "Yes, we have unfullfilled demand, but looking mainly at history." Bryant also said that, historically, very strong Q3 and Q4 often means slower Q1. Again, I agree with you that Intel is being cautious on Q1, nothing else. Ashok Kumar (dig on Celeron, no meaningful answer) I believe the answer to Kumar's "why Celeron not as hot as you expected?" is below (See Andrew Neff answer). Larry Morgan - "discuss cap spend decline" Bryant: less overall Bryant said cap spending would be less (I think 3B vs. 4B previously planned.). However, most cuts (actually less expansion) would be in land, buildings and factories (like no DEC-like plant purchase in 1999). He said fab equipment would be about the same as in 1998. Then, he said less $ to be spent in assembly and test. I read that as not bad for the semi equips but not so good for back end like test cos. (Teradyne, HP, Advantest). Andrew Nuff: Was Celeron below expectation? Otellini: "Didn't quite double because PII was much, much stronger than expected...We switch over some production to PII" Otellini said Celeron quadrupled from Q2 to Q3. They then expected it to douple from Q3 to Q4. However, it didn't because, as you said, Intel switched some capacity over to PII. Japan - same o same o They saw an uptick in notebooks there but flat otherwise. T Kurlak: "re: PC Week shows Celeron benchmark vs 400 PII as similar or better - Does this imply lower PII price or does this [PII] go away?" Otellini "The latter - (PII goes away) "PIII will change the whole nature of how we position our high end brand" [Intel thus plans to displace PII with PIII, but will maintain PII for corporations that want commonality with existing resources.] "No more engineering on PII" Otellini brought in that 0.18 would be a diffentiator also for PIII (from Celeron). Also mentioned here, as you did elsewhere that PII would be carried through year for corporate folks that feel queasy about Y2K (don't introduce a new platform once Y2K is "fixed"). My note: Kurlak sure comes across as a surly SOB, at least on the phone CC. Kannoca: Mix on the high end? Otellini: "yes - it will grow... Strong growth rate for some time." What I wrote down is Janaka of Janaka Capital and his question was how are servers doing (you said high end, could be construed as PII). Anyway, servers are outgrowing desktop and expect that to continue. One reason is Intel is moving into new territory with servers, so that gets new business (Xeon). Mark Edelstone: Why are consumers buying up in technology? Otellini: I don't know if I can say that. Paul did mention a lot of advertising, like TV, as helping PII. Celeron is also advertised but more through paper ads, internet, etc. question: "Have greatest cost savings been done?" Bryant "Nope - it is continuous and will continue through the year." Bryant noted the slot to socket switch. I thought he said, not certain, that cost savings would improve, quarter to quarter, through year. Otellini: Y2k - There is one school,those who are working on it and will freeze the 2nd half. And there is a 2nd school that hasn't worked it and will madly scramble at end of year. This is somewhat a US/non US thing. The US is at least 40% ahead of anyone in the Y2K problem, according to Gartner (how measured?) So, a lot of that mad scramble will be Europe, etc., FWIW. This last paragraph is my opinion. I ran out of gas here. Thanks again Jeff for getting the lion's share of the info. Tony