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

To: Tenchusatsu who wrote (74880)	2/28/1999 10:47:00 PM
From: kash johal	Read Replies (1) \| Respond to of 186894

Tench, >Re: Even after Intel cut prices on the Celeron to regain marketshare >from AMD, it seems that AMD was willing to hack off their own arm >and cut prices in response. AMD is more concerned about keeping >marketshare than about earning profits. That's not a big deal with >AMD, since AMD really didn't have much profits to lose in the first >place. But in the end, the OEMs saw no real reason to dump AMD and >go with Intel in the low-cost retail end, since now they can get AMD >chips for pennies and make out like a bandit. >Intel could easily price the Celeron so low that AMD will go >bankrupt, but of course, the FTC wouldn't like that. Tench, Intel cut Celeron prices in December and cut them again in January. They are rushing the 433 and 466 out as soon as they can. Yet they are losing marketshare. With AMD now starting to ship high volumes in the 400/450 Mhz speed grades what price the Celery? Even if Intel slashes 400/433/466 prices to $50 a chip they will still not be capable of putting AMD out of business. First of all some customers prefer the K6-2. Then AMD has the K-3 which hurts Intel if these end up in the $100 ASP range. If Intel launches a desperate price attack you must realize that your stock price would drop by well over 50% or $100Bn+ in valuation in a few months. AMD has several billion dollars of fab capacity coming on line and they have around $500 Million in the bank. Even if their lossess went up to $150M/qtr they would not go bankrupt for a long time as the German banks that have loaned $2Bn for fab 30 would ensure that it not take place. The worst that could happen is that when AMD goes for more money that AMD shareholders would be shafted thru dilution. You have to understand that Intel has to defend it's profits and it's stock price so they cannot simply try to kill off AMD. The way that Intel wins is by introducing faster processors than AMD. this way they can charge premiums for their processors. Unfortunately for Intel the PIII is not a radical move up the CPU performance scale. the KIII is close enough that AMD can get a decent margin on it. And with the K7 AMD has a chance to match or even exceed the very best that Intel has to offer. And the arrogant assumption that business customers will not purchase AMD is idiotic. In my experience business customer typically are willing to pay more to get the best in performance and are fairly agnostic on who they go with. In a few months that may well be an AMD chip. Regards, Kash Johal