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chipguy,
I don't think Intel
will seriously damage its ASP at the granularity of
quarterly reporting, certainly not extending beyond
one bad quarter.
I see 3 quarters at minimum. Q1 is already done, AMD warned that Q2 will be bad, and I don't see how it can turn around in next 15 days, and then there is Q3. I see some hope for Q4, because I think Intel will ramp MCW fast, and will not be at competitive disadvantage in that quarter.
Joe
chipguy,
So you think Intel will sell 1000 Conroes on day 1,
2000 Conroes on day 2 and so on?
IIRC Intel had a million units of Yonah ready to go on
day one and IMO Intel will have a lot more Conroe
avaible at its release.
Does it matter? My point is that at the beginning of the ramp, Intel will depend for a significant portion of the revenue on Neburst.
I know the fan in you is salivating about damage to AMD, but I think you should think things through first.
Joe
chipguy,
Wrong. This is risk build material. It is insurance against
a last minute problem in ramping Conroe. It is sold off *as*
Conroe shipments ramp.
That comment seems to indicate unfamiliarity with the financial side of the business.
Ok, Conroe ramps from 0% to 10% or desktop, say in first month or two. Now how do you dump the risk build material, without affecting the other 90% of desktop that is still Netburst (the same as the risk material)? Conroe pricing is not high enough to single handedly maintain ASPs at $150, with everything else selling substantially below that threshold. Intel will still need some Netburst based product selling at or above $150, for some time to come.
Joe
Temp,
We are talking past each other. I know the difference between a single core and a dual core A64, and I was merely pointing to the fact that the price has already dropped on the Athlon 64 3800+, while it appears as a 7/24 price drop on the list quoted at DailyTech and their commentary.
Sorry.
Yes, the timing of SC cut is now (or imminently) but cut in DC is scheduled for July 24.
Joe
Buggi,
<iSo its
my feeling that you want to see lower X2 prices. Joe, why
decrease prices here, when you couldn't ship the additional
volume which will the market force, if AMD had done it this way.
So they are maximizing revenue and I think it was the right
way ...
Yeah, X2s. I would not have lowered the prices anytime up to the end of Q1, because AMD could not ship additional, but at the end of Q1 (when AMD symbolically raised the prices of X2s by a few dollars), I would have reduced X2 prices by 5 to 10%, which, IMO, would have maximized Q2 revenue (unit and dollar). The capacity is there this Q to deliver.
Joe
Tenchu,
Puh-lease. You could poke so many holes in AMD's case, it's embarrassing. But of course, you're less concerned about AMD's mudslinging and more concerned about what sticks.
I see you keep inventing more reasons for AMD law suit:
- mudslinging
All while ignoring the elephant in the room.
Joe
chipguy,
IMO all P4 SKUs are much less desirable than Conroe so
if Intel wants to clear its P4 risk build inventory and do the
maximum damage to AMD's bottom line at the same time
it will basically config every last device to its full potential
and price the whole shebang to move quickly.
That would do maximum damage to Intel's bottom line. Netburst is Intel's premium product, and it needs to bring in substantial portion of $6 Billion of revenue.
Don't forget that vast majority of K8 products (except high end X2s, FX and high end Opterons) are also downbinned.
Joe
wbmw,
The second was a link to Intel's website showing their price list, which is available to their broad customer and distributor base.
Reseller Mike said his distributor has these in stock, so it is available to broad base of white box OEMs. Big OEMs have everything available to them. Here is what is available to retail buyers:
http://froogle.google.com/froogle?q=celeron+310&btnG=Search+Froogle&lmode=online&cat=136...
As you can see, everybody can buy one. Or one million.
So either you are making up the facts as you go along, or you are viewing something you have not yet presented.
It is not "yet to be presented". It is deliberately hidden from casual CFA looking at Intel prices. Intel does not want its desperation to be known to financial community.
Since when did Via become Intel's main concern, and since when does Intel need to ship enough processors to compete in this market
Because Via has some market share. It may only be 1 to 3%, but Intel is looking for unit market share, and desperatly wants to stop bleeding now.
Otellini and Bryant did not appreciate that analysts came just short of calling them liars in the last CC over the lost market share.
joe
wbmw,
They build this part that can be sold as anything, and yet you claim they are trying to flood the market with peanut priced parts that are too slow for anyone to care about. Brilliant, Joe!
I don't claim. I observe it in the marketplace and provide links. Those are facts, not claims.
Joe
wbmw,
Andy was not speaking about the low end Celeron when he made his quote; he was speaking about the Pentium 4
He was speaking of Netburst (which includes Celeron and Pentium 4).
Joe
Temp,
Those are SC parts. Those parts did drop this week. But not DC (X2) prices.
Joe
chipguy,
So Intel is building inventory of bottom SKU Celerons as
insurance against delays in Conroe? I can't believe you
are really claiming something as stupid as this.
Intel is building parts that can be fused into anything Intel desires (within the part's capabilities), including $37.99 Celeron.
Joe
wbmw,
The most obvious source is the Intel price list, which lists currently available parts, as opposed to one time discounts based on inventory reductions.
I am not sure why are you arguing this to the death, when you know the facts are not on your side.
This is not a one time discount. This is not inventory reduction. This part has never appeared on Intel price list. Despite the fact it has never appeared on Intel price list, it is a new part that Intel has started selling in recent month. Intel created this part just very recently, to fight a price war.
The reason Intel started selling CPUs at bargain basement prices was to stop losing market share.
So no fluke. It is a plan. Intel is now trying to take market share from VIA and pricing the processors to do so.
Joe
wbmw,
Here is a direct quote:
Some of the stuff in the line today is some of the older products that have to be there in case you have a product slip or something happens and you need to ship product. So there is some risk that in a transition, you build a bit of a bubble and you don’t need to ship that stuff. It’s a small risk. There are lots of places in this world you ship some product — essentially as good as most people’s in the world. So there’s, the task for us is to find places to put those.
So there are older parts in the line today, just like the $37.99 Celeron, that Intel plans to dump on the third world in the future.
Joe
Temp,
I have not seen X2 listed at these prices anywhere yet. As far as other SKUs, I can see why AMD would rather sell 150+ mm^2 part rather than 200+ mm^2 parts. Maybe the 2x1MB parts will be priced closer to higher clocked 2x512parts, rather than in the middle.
Joe
wbmw,
It's not nearly enough. AMD will be losing market share beginning in Q3.
My problem is that AMD should have started cutting the prices earlier at a more orderly pace. AMD kept the prices too high for too long.
Joe
wbmw,
The Celeron you mention is so far below desirable to the market, that it takes some time for the market to consume it.
Where do you info on quantities sold, rate at which they are sold? None of that info is publicly available. If you can point me to your source, I would welcome it. Otherwise, I am assuming that you are making this stuff up.
Joe
wbmw,
No, you don't. More likely, you are hoping that Intel does in fact announce poor results as a result of their price cuts, and that such results continue to drive Intel in a financial situation where investors will demand that they give AMD some mercy. Stop kidding yourself.
I don't have any position in AMD. And as I posted, I intend to acquire more Intel, so lower prices would not be entirely a disaster. Small loss on 1/4 of the position, lower base on the other 3/4.
If the summer price war creates a buying opportunity in AMD, I wouldn't mind.
Joe
wbmw,
And you base this on what? Intel said they would be driving towards major inventory reductions this quarter.
No. Andy Bryant said Intel is building a bubble of product, that will either not be sold (written off) or it will be dumped on third world. So these prices are here (or elsewhere) to stay.
Joe
Tenchu,
No, it isn't. So I was wrong about AMD reporting a loss. Doesn't change the fact that AMD is using the lawsuit for PR purposes and is hoping to make whatever gains they can get away with through judicial activism.
Is that a 3rd and 4th reason for the law suit?
- PR purposes
- gains throught judicial activism
You seem to be all over the place. It is everything other that what it really is: Making Intel stop illegal monopolistic behaviour and making Intel pay for past violations.
What do you say about the AMD execs who believe their recent gains was because of the lawsuit? Will you admit that's a crock of s--t?
Reduced arm twisting by Intel has certainly helped AMD. What's the problem with that?
Notice that Intel has to now resort to more traditional method to keep / gain market share - price cuts and better products, unlike the past, when arm twisting was all that was needed.
Joe
wbmw,
Still hell bent on using the $38 Celeron as your Supreme Exemplar? Time to get over it, it was a one time sale of inventoried parts.
It has been for sale for about a month. These are parts specially fused in order to create a new price point, not some old discontinued product.
And, BTW, Intel has replenished Newegg's supply of the 2 other sub $50 Celeron parts, so again, no one time deal, but ongoing shift of prices in order to hold market share.
joe
doug,
If "ok" means revenues down 15% QoQ, maybe.
I don't think it will be that bad. If it is, we could see stock prices that would make AMD a good buy.
Joe
rlweitz,
Some of the prices are quoted here:
http://www.dailytech.com/article.aspx?newsid=2800
(click to enlarge)
Joe
Tenchu,
Like I said before, look at the lawsuit. Even with AMD's recent gains in the market, AMD will never be satisfied with being second banana, so they'll use whatever means necessary to come out ahead. (Or do you still think the lawsuit is all about "free and fair competition"?)
At the time when the law suit was filed, you said it was because AMD was about to report a loss, and the law suit was to deflect attention away from that.
Now you say that law suit shows that AMD is not satisfied with the gains (that happened after the law suit was filed).
Is this a retroactive revision of your opinion of the law suit?
Joe
chipguy,
I am very much looking forward to watching the next 6 to 12 months unfold.
Which happens to be one of "cons" in my decision of taking a position in Intel. I would have been more comfortable if you were negative on Intel.
BTW, I like the fact that INTC is moving in direction of becoming an x86 pure play.
Joe
Joey,
You have no idea what you're talking about. You are not considering the "cost" side of the equation. Ever think that Intel can dramatically cut prices and maintain margin because they can?
Pleae read my reply here:
http://www.investorshub.com/boards/read_msg.asp?message_id=11562265
Joe
chipguy,
Isn't that a picture. Keith and Joe making the rounds of
the Intel thread making a case for showing mercy to their
precious little AMD.
I would be more concerned about Intel management showing mercy on Intel shareholders. The beatings have certainly not improved the morale. You seem as bitter as ever.
Joe
wbmw,
Dan3 will fade into the background, and jHalada will remind all of his INTC leap calls that he will have made good money on (which of course says nothing of his opinion on AMD).
I sold all of my AMD when I realized the extend of Intel price cuts and the carnage it will cause. INTC + AMD revenues and profits is going to be lower YoY for some time to come. I may get back to AMD, at the hight of the FUD, which I expect to be roughly in August to September. I may possibly be buying some INTC at that point as well. I am hoping that at that point, INTC management will start to realize that it has to start showing some results to the shareholders, or else.
There was one lonely call for Otellini's head from some analyst. I expect to hear more of those.
Joe
wbmw,
Like others, you are mistaking inventory reduction inspired sales for something that will be ongoing. Sorry, but $38 Celerons is a Q2 phenominon, only. Just view the price list.
There is no inventory reduction. Only a market share grab at bargain basement prices.
Joe
wbmw,
You and others are being far too hopeful on the "shift in mix" prospect. It basically assumes that for every person who would have purchased an Athlon 64 or Athlon X2 for $200 or $400 or $600, that instead will be paying $150 as some people think, there is also a person willing to spend $50 on a Sempron, who instead decided to spend $150 on an X2.
No. That is absolutely not what I am saying. What made you think of such a ridiculous scenario? Even a strawmen argument must be somewhat in touch with reality.
Your theory is that a person has certain product in mind, say Athlon X2 4600, and that the Athlon X2 4600 buyers will go from spending $600 to spending $300.
My theory is that there are no X2 4600 buyers, but there are $100 buyers, $200 buyers, $300 buyers etc. As the prices shift, these buyers will just buy different processors in their price range.
As the overall pricing level declines (which is what's on schedule for this summer), the $300 buyers may get a $250 bargain, but overall, they will stay in their range.
Sorry, but that does not support the traditional reaction of the market. Instead, the $50 Sempron buyer gets a $50 Athlon 64, content that they can now get more for their money. The $150 buyer of a low power Athlon 64 will also be content that they can now get an Athlon X2 for the same money.
Makes sense.
And meanwhile, the $600 Athlon X2 buyer will not see anything in the $600 price range and instead get a $150 indentical product, content that they can spend less for their purchase.
But this is where you go off the deep end. The $600 buyer (and there are not many of those) will still get a high end product in his price range, whether it is from AMD or Intel. Intel may win some of these buyers if Intel products are superior.
Joe
wbmw,
I don't foresee Intel reducing headcount more than the 5+% per year seen by attrition, nor do I see them with such a sharp decline in ASPs, at least in the near term.
I was calling it the worst case scenario. You may be right about no more than 5% per year "attrition" from the normal business, but Intel may chop off some of the unprofitable divisions by selling them, IPOs or closing them, and those could provide sharper cuts than "attrition".
BTW, cutting off the money losing divisions is the best near term opportunity for increased profitability (ignoring the associated one time charges).
It will probably take 3 quarters for Intel to recover from the kamikaze pricing of mid-2006, assuming Intel management acts rationally from here on.
At least in Intel's case, their price points on current products are being lowered while new products are replacing the current high end. AMD plans on lowering prices without a new product in their high end.
New Intel products are not replacing current high end Intel products, which is the problem with Intel price cuts. New chips will at some point be replacing the current one, but there is a period of drought between the time dramatic price cuts started and the time the new products start to contribute to the bottom line.
But anyways, good luck on those Jan 2008 leaps. I may pick up a few as well.
I think there will be plentiful opportunities to get these probably at lower prices, as the Wall Street realizes what the pricing is doing to Intel's top and bottom line. One way out of the current misery (share-price-wise) would be a swift action on unprofitable divisions, which I think is the only risk buying now, instead of waiting for upcoming lower prices.
Joe
drjohn,
I have actually been thinking about MSFT. I will have to do more research but I think it is getting attractive.
Joe
Keith,
The signs I´m currently seeing suggest margins getting worse as INTEL gets even more aggressive on pricing in Q3
You are wasting your time. Intel shareholders have been indoctrinated into believing that $1 to $2 swing in cost of silicon is crucial to the gross margins, and $25 to $50 swing in ASPs is irrelevant.
What you are trying to say (that the price matters) will never penetrate the skull of a typical Intel shareholder.
Joe
Alan,
re:b) to die trying is not acceptable to majority of shareholders, when there are so many a lot more attractive options.
It is certainly a high risk strategy, but one that was required to hold onto the bulk of the CPU market. I do not see any other viable business plan for them...
Intel is still, even under very pessimistic scenario going to hold onto the bulk of the CPU market. It may be 70% rather than 85%. The gap between 2nd and 3rd is nearly as wide as between 1st and 2nd, an there are no new entrants on the horizon, so this could be a very comfy market.
Majority of industries and markets exist just fine with number of profitable participants. It seems somehow ingrained in Intel's DNA that Intel needs to crush everyone, many times, regardless of whether it provides any benefits to the shareholders.
Take Intel's entry into the NIC market, which hastened demise of 3com. There was no benefit to Intel from the entire episode. The NIC market was going to go away anyway, since the integration process is inevitable. The networking and telecom equipment business seems to need a total, undivided attention of participants, and intel's entry into it as a side business was destined to fail.
In general, Intel's the theory was that Intel can produce the highest performing silicon, therefore, it should be easy to just apply this silicon at markets that need high performance semiconductor devices. This has not worked. The fact that it was not working was known for a while, but it was swept under the rug of high CPU profits. Nothing changed about these side businesses of Intel, except that their losses are harder to sweep under the rug, as CPU profits diminish.
Anyway, my take is that Intel management should be looking after the shareholders. The current course of action of reckless price cuts is bad management.
OTOH, divestiture from money losing markets is a great idea, so not all is lost.
Joe
RGood,
Oh dont tell me you havent noticed that AMD is down 17 bucks
In that sense, Intel is a much safer investment. It can't go down $17 from here.
Joe
Alan,
I think the new dynamic (significantly more capacity available to AMD) will require INTC to basically grind AMD into nothingness... or die trying.
That may be Intel strategy, which is to hold onto the monopoly at any cost. It may not be a good strategy for 2 reasons.
a) Intel is under microscope now, so the timing is just about the worst
b) to die trying is not acceptable to majority of shareholders, when there are so many a lot more attractive options.
Maybe management change would be the best course of action for Intel. Someone from the outside.
Joe
Snowrider,
1. Clear out old inventory so Intel's doesn't have to write it off.
That is clearly not the intension. Bryant said during the CC that Intel is building a bubble of inventories for upcoming product launches, and inteds to offload on the Third world. So it is not inventory clearance, but a market share grab at unprecedented prices, such as $37.99 Boxed units.
2. Make room for higher priced and higher performing new processors
Unabated production of parts that are already selling at VIA like prices may end up crowding out, or canibalize the higher performing new processors.
Joe
Tenchu,
There's precedence for this "kamakaze stuff," and almost every single time it has turned out better for Intel than for AMD.
Intel what? Management or shareholders? The shareholders suffered about 35% decline in the value of their Intel portfolio. The management got new options with low strikes...
Joe
Snowrider,
Interesting. Did you notice RBC still has a price target of $23? Seems odd they would call INTC "dead money" yet they anticipate a $5 stock increase.
With the speed Intel is dropping, maybe the price was $23 when the analyst started writing his report, and he forgot to update the target with today's multi-year low today as he finished.
Joe
Alan,
I agree they can maintain revenue...
if they can generate enough silicon. AMD should get about 1 X2 die for every 3 Athlon 64 die... thus to maintain unit output they need to triple silicon output. Now, as you have noted, as ASP drops the potential volume will increase, so to actually maintain revenue at the lower ASP's will require more than 3X the silicon area. That is going to have a pretty dramatic effect on gross margins and profitability for AMD... no?
Good point. But AMD does not need to convert 100% of its capacity to X2 and some Turions. Only Athlon 64s that are not already X2. Let's say 20% to 30% of output. So let's say you are right about 2x die area. It would mean AMD will need 140% to 160% of its Q4 or Q1 capacity, to ship Q4 / Q1 equivalent of units.
Q2 posed no problem as overall units are down, and Fab 36 output contributed somewhat. Capacity should not be under pressure in Q3 either, as there will be low end Chartered output, and more substantial Fab 36 output. Costs will likely go up. Q4 to Q1 2007 should go back to normal, costwise as AMD transitions X2 production to 300mm 65nm.
Prices and unit volume are big unknowns.
Joe