Intel Corp (INTC)

[Tim May]

Yes, I wasn't taking that completely seriously. But it actually captures a theme that keeps coming up, to wit, that Intel is dominant in "PC world" (laptops, desktops, servers) and should not continue to "throw money" at the mobile world. Effectively, that Intel should licks its wounds and move on.

Intel management correctly realizes that it cannot lose this battle. It has to push into the ARM/Qualcomm arena just as they have to push into laptops, desktops and servers.

No matter much "contra revenue" it costs. (A friend pointed out this silly term used to have more honest names: loss leaders, buying market share, costs of entry, etc. There was a time at Intel when just the 2716 EPROM accounted for essentially all profits, also a time when the 2147 SRAM was likewise. That is, nearly all of Intel's other products, including microprocessors, were generating "contra revenue." This was the cost of doing business, of laying the groundwork for future profits. Even if meant Intel was "dumping" CPUs and doing special deals with IBM, for instance.)

My friend think this term in now used for antitrust/dumping reasons. Intel cannot officially say "Yes, we are selling these chips for less than it costs us to make them" as this ipso facto implies "dumping."

(U.S. memory chip makers foolishly started the world down this path when it launched a crusade against Japanese DRAM makers for "dumping." This back around the mid-to-late-80s.)

Markets clear. Stuff gets sold at the price buyers are willing to buy for. A truism. But the "dumping" name generates much mischief, including when Europe and Asia charge Intel with dumping. Hey, it's not dumping, it's contra revenue! Like matter and antimatter! Cool.

--TIm