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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Mary Cluney who wrote (45814)	2/5/1999 11:14:00 AM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Mary, Shouldn't have done the Queen of Hearts bit. Too bad there is nobody in our govt. who is important enough to shoot. Maintaining 50% margins when they were 60% is not a good sign. If you want to have a bloated pe multiple, somewhere down the line you have to show some growth. Gerry Tsai was indeed my boss at one time, but he sure didn't train me. He just sat back and took credit for all the money his co. made off the sales and performance of my fund. It made him a hero and took him from Exec VP to CEO at American Can, which became Primerica. Fact is, if I was trained by anyone, it was by Hank Hermann and Russ Thompson at Waddell & Reed. I knew a lot before I got there, but they taught me how and when to duck. However, I would have preferred their training method not be throwing pointed objects at my head. <G> Mary, you have a great sense of humor. Too bad we had to start posting to each other when your favorite company was in decline. <G> MB

To: Mary Cluney who wrote (45814)	2/5/1999 12:24:00 PM
From: Earlie	Read Replies (2) \| Respond to of 132070

Mary: INTC does many things well. They are superb manufacturers for starters. The company also has weaknesses. It has real trouble in cost reduction, and they've thrown their hands up with respect to the Merced project. Without HWP's assistance, their more advanced micro projects would be dead meat. From my perspective, INTC's difficulties in the immediate future will relate to: - poor return on their high-end chips,.......INTC can build them, but they have to be sold. Intel makes buckets on these chips, so long as their production lines are running at or near full capacity, but things unravel fast if that is not the case. The high end market has no sales drivers at the moment. New apps could change this but so far, they're not on the screen. Mediocre sales also implies heavy price cutting, so I expect very serious reductions to margins as this plays out. The fact is, that this scenario is already occurring. Incidentally, this doesn't include the amortization of R and D costs, which really hits on low volume situations such as this is becoming. - Cash. Intel has always had tons of it, but the taps have been open of late, and it is coming off. The company can always buy revenues, but this just further craters their margins. (BIG jewels are hard to find) - Excess manufacturing capacity. INTC has built a great deal of modern physical plant. Great when things are humming, but a bummer when things slow. No cost cutting room. To keep plants humming, prices must and will be cut, because the alternative creates an immediate disaster. - The growth of the bottom end in the PC world. This is an Intel nightmare. They weren't prepared for it. They responded slowly, They allowed a competitor to grab an incredible chunk of market share, they shoved a dumb product out there that made things worse, and they have resorted to cannibalization of their intermediate products s to attempt to regain an entry,...expensive. - PC saturation. This is out of the company's hands, but if a turkey like me can document it's slow but sure occurrence for over two years, surely a company with Intel's resources should have seen this and prepared in some way for it. The company has effectively placed its head in the sand on this issue. I may be wrong but I also see Rambus shaping up as an ugly problem. Rambus is efficient, but its expensive to build. It also provides no real benefits unless it is employed by a high end micro. The memory manufacturers are loath to gear up to produce it, because they can't see enough market to make it a worthwhile risk proposition. (why pay big bucks to buy, install, and debug production equipment that won't pay for itself?). I'll provide more details on this later, but for now, take it as an excedrin headache for our favourite church. This is the reason that Intel is running around the planet dropping off big cheques to memory producers ("please, please, please build these Rambus memory chips for us, or we're in deep lamb droppings. Here's some money to buy the equipment,...etc") Intel won't die, but its bloated share price will deflate badly once the market catches up with these realities. The current price exists on a dream that just can't occur. Best, Earlie

To: Mary Cluney who wrote (45814)	2/5/1999 12:29:00 PM
From: Merritt	Respond to of 132070

Mary: <<Also, not to get too personal, but weren't you the original Manchurian Candidate. Weren't you trained by a Kuomingtang gangster>> Mary, I've heard of poetic and artistic license...but this is the first time I've seen humorous license. Ol' Chiang Kai would be rolling in his grave...but not with laughter.<G>