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

To: Burt Masnick who wrote (71442)	1/14/1999 10:59:00 PM
From: nihil	Read Replies (2) \| Respond to of 186894

Sometimes you can throw 10 heads in a row with a true coin. But not often. Actually, one time in 1,024 = 1/k In your model So the real question for me is which one: my estimates -- arguable a) Is well managed p(i) = 0.9 p(a) = .5 b) mfrg transition p(i) = 0.9 p(a) = .7 c) Markets well p(i) = 0.9; p(a) = .7 d) Is financially robust p(i) = 1.0 p(a) = .5 e) meets commitments p(i) = 1.0 p(a) = .5 Joint probability pi = 0.779 pa = 0.05875 These are calculated as independent events, of course, absurd. It looks as if it is about 18 times as likely that Intel will score as it is that AMD will score. This suggests to me that the prices of the two stocks are badly out of line. Intel should probably have a PE of 78 (maybe $275 and AMD one of 6 (maybe $10) -- give or take a few percent. Once again I have to suggest that AMD stockholders, which by the wrath of God I am, should welcome a rescue of AMD by Intel. Once Intel through vigorous competition (i.e. price cutting) has driven AMD to the wall, it should be allow to purchase the assets for a $1 billion or so (few firms would take over the obligations of a semi company competing with Intel. DOJ, of course, could not oppose the takeover unless some other purchaser of distressed companies could be found. DOJ might be able to require that AMD not be broken up or the K-6-3 and K-7 lines preserved semi-independent of the Intel systems. Intel could benefit the whole market by allocating niches to each product line so customers would have some variety of fast products within the x86 family. But this would be unusual. Should Intel refuse, and no other company bid, the remains of AMD would be valueless, and the stockholders robbed of liquidation value. AMD is almost exhausted of resources to continue investment. Much of the pitiful earnings this quarter are at least semi-fictitious and do not produce cash. Debts must be paid and is junk. The next slump may very well mean death for AMD. It needs a very rich partner. There is only one available.