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

To: Scumbria who wrote (73036)	2/5/1999 3:04:00 PM
From: Paul Engel	Read Replies (1) \| Respond to of 186894

Slippery Slick - Re: " Suppose that Intel only makes $1.5 billion. What does that do to the stock price?" It will drop. Suppose Intel makes $2.2 Billion. What does that do to the stock price? Paul

To: Scumbria who wrote (73036)	2/6/1999 4:01:00 PM
From: Saturn V	Read Replies (3) \| Respond to of 186894

VICTORY AT SEA Cruiser SS AMD will be floundering badly for the next one year and needs a brand new business strategy. Battleship USS Intel is in the process of delivering three devastating salvoes at its arch enemy. Salvo No 1 was in the form of 370 pin Celeron. Due to the lower cost of this design AMD is loosing money by following the “25% less than Intel sales tactic” .SS AMD has already begun to take on water. However AMD's problem will not be fixed in three months since the impact of the next salvoes has not yet been understood. Salvo No 2 will be the form of Pentium III to be delivered over the next two months. If any compelling mass usage applications emerge which can only be executed on Pentium III, AMD products will be confined to the extreme low cost niche only. Direct Music and Direct6.1 appear appealing but the exact applications which use them will not be seen for several weeks. Real Time MPEG encoding is a must for DSL based video conferencing, but that may not have an immediate mass market. The next three months will decide this issue. If Pentium III applications emerge for the mass market , SS AMD will be crippled until it can provide the same capability. Salvo No 3 will be in the form of 0.18 process and OLGA packaging. This salvo will be delivered in Q2. In November 98 Intel made a compelling presentation of its cost cutting measures for 1999. The 0.18 process will be very cheap [ it will recycle a lot of existing wafer manufacturing equipment reducing depreciation costs enormously], and its introduction should be imminent. It should allow Pentium III speeds of 800MHz , and Celeron speeds of 700MHz. [ Obviously Intel will not sell Celeron at high speeds until the competitive situation requires it]. Furthermore the chip costs of Pentium III and Celeron will drop dramatically. The OLGA package will reduce package costs dramatically below that of the ceramic package used by AMD. Intel has been carefully implementing a cost reduction strategy for the past eighteen months. Very likely Intel will be able to sell Celeron with its customary 50% margins at a price below AMD's variable cost of manufacture. This will spell the end of ‘25% less than Intel ' tactics, and AMD will need to retreat until it can also implement the same cost reductions, and that will take at least one year. Unless SS AMD temporarily withdraws from battle, this salvo could send it to the bottom. The dreaded K-7 weapon in SS AMD arsenal will be a dud. The new K-7 infrastructure will be its biggest weakness. The Taiwanese chipset and motherboard manufacturers are low cost manufacturers, but have no expertise in high signal speeds needed to unlock the potential of the K-7. Compaq, IBM and HP have the design expertise but are liable to develop K-7 infrastructure designs for in house usage only. The only hope is that users get concerned about the possible demise of AMD; and IBM, Compaq, HP band together to design the K-7 infrastructure and give the designs free to the Taiwanese. Another major problem for the K-7 will be the 0.18 micron process. Until AMD gets their 0.18 process the K-7 will be outclassed in clock speeds [ Mhz], nullifying any advantages it might have had. This year, the financial outlook looks difficult for AMD . A year of major loss would have been acceptable for other companies. But AMD has been loosing money for several years, and is borrowed out, making its financial situation hazardous. What can save SS AMD ? I. Luck !!! Intel can fumble ! Or the PC demand can explode unexpectedly, far in excess of Intel's reserve capacity, giving AMD a reprieve. II. The user community gets concerned about the viability of AMD, and may even give AMD a premium as an alternate source. The volumes would shrink and AMD would have to sell Dresden. A new business model and a new business strategy is needed quickly. And the SS AMD is in desperate need of a new skipper .The crew of SS AMD have worked very hard and valiantly despite heavy odds and their achievements are laudable. But unless changes are made now, SS AMD might vanish into oblivion, and USS “Intel will rule the waves”.