Replies to post #30780 on Intel Corp (INTC)

[Dan3]

AMD to cut prices by 2/3s on most chips.

With output from 3 times as many FABs as they had last quarter (from 1 to 3) AMD is slashing prices next week:
http://images.dailytech.com/nimage/2094_large_amd_pricing_1023.png

Intel is expected to exit 2006 with NGA parts at a run rate of 40%. So they'll likely average less than 20% over the next two quarters (ramp likely will accelerate a bit rather than be linear). The other 80% of Intel's production for the rest of the year will be Netburst parts facing that new AMD pricing.

Not great for AMD, by any means, but given Intel has 10 times as many employees to pay, this is going to be a tough year for Intel.

Intel hasn't faced this kind of financial pressure for a long time. Their working capital is down more than $5 Billion in the past 2 quarters and they're starting to accumulate some debt.

[wbmw]

Re: After a mediocre report and not so great guidance and analyst comments of a price war, it seems like now might be a good time to buy Intel for the long term. I haven't posted in a while. I was a long term AMD holder, but I exited that position a while ago and I have been sitting on cash waiting for a new opportunity. IMO, Intel is that opportunity. In the next week or so I'll be buying shares and 2008 leaps. Below $18, Intel is almost a steal. I believe Intel could have a turnaround year in 2007 and be back up in the $30s.

Based on the earnings conference, I am trying to determine the earnings power of Intel going forward. Along with some Wall Street worries, I am seeing limited revenue growth opportunities, except unless the company can make the platform strategy work. There may be cost cutting opportunities, and Intel can surely focus stronger on their core CPU and component markets by cutting out unnecessary business groups. This would increase Intel's earnings power, assuming they can remain competitive. If Wall Street believes Intel will hold market share and grow with the market, we might be able to expect a 20x P/E multiplier on earnings of >$1.00. But I don't think we'll see the days where P/E is >30 and earnings is >>$1.00. The market is changing rapidly, and other than some short term improvements due to increased competitiveness, I don't know what the long term will hold.