Advanced Micro Devices Inc (AMD)

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The Street.com - Intel before the fall

By Herb Greenberg 10/17/2003

Let's turn to the numbers nobody wants to talk about on Intel (INTC, news, msgs).

While the quarter was undeniably good, this is really just another round in that game we all love: beat the Street. Sure, the gains are big, but look at what they're being compared to!

More important is that Intel's stock price is 50% higher than it was in pre-bubble 1997, when the company earned 73 cents per share for the first nine months. Compare that with 53 cents in the first nine months of this year. (Revenue, mind you, is slightly higher now.)

Looking at it another way, Intel is earning less money today on slightly more revenue than it did six years ago. Money 2004.
Smarter, faster and easier
than ever.

I know, I know, look at the margins. Margins, schmargins.

The margins are good, Fred Hickey of the Hi-Tech Strategist will tell you, in part because Advanced Micro Devices (AMD, news, msgs) has pulled back on the Athlon/Pentium battle as it prepares to deliver what many believe will be the industry's big blow with its AMD64 chip. (Must be why I just got the last H-P notebook with an Athlon at CompUSA for $1,000; it was being replaced by the very same model with a Pentium 4.)

As Fred told me Wednesday, "The biggest part of story is that all of this Intel buying is occurring when the guillotine is already on its way down. Obsolescence is a problem in this industry. Always has been. Always will be."

Intel, he adds, "is facing a huge loss of market share."

Remains to be seen if AMD will finally have the last laugh, but that's Hickey's bet. And before you go saying that Hickey is a washed-up perma-bear, just remember this: That's what I used to hear when I would quote him in the mid-to-late '90s.

Suddenly, when people least expected it, they wished they had paid attention. That, too, is the way it always has been and always will be.

Herb Greenberg writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback and invites you to send any to [e-mail]. Greenberg also writes a monthly column for Fortune.

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