What is going to happen to your earnings if you take a chip that you were able to sell for $ 300 a piece ( Pentium II) and market it as the "new" CeleronA and sell it for under $ 100. And were talking the IDENTIAL chip here !! Wake up !! It doen't take a brain surgeon to figure this one out.
And on top of that INTC to cut prices even more to protect you decreasing market share ! It's a nightmare in the making. Period.
AMD , on the other side has caught up and is about to surpass INTC in respect to chip technology. They are no longer chasing Intels tail. They are right up there. Also, what is changing is the PC market itself : the top of the line machines (450 MHZ) are no longer the top sellers they used to be. It's all now in the sub $ 1,000 machines up to 350 MHZ. PC buyers have figured out that don't really need a 450 under normal circumstances, they do not benefit from the extra performance and are not willing to pay for it. AMD on the other side will make a profit in 99, not only because they are taking away market share for INTC but also because , for the first time ever they have the same or better performance as Intel. AMD has surpised investors in 3Q98 with positive earnings. On Jan 12 they will announce 4Q98 ; analyst estimates are 15 cts/sh , I think it's going to be more than twice that. All taken away from INTC's earnings. We shall see.
The news of AMD's superior chip performance and speed just came out along with the Business Week article, ecpect a pull back of INTC this week.AMD has lagged and is a sure bet now to make up this distance. That's a fast 13%, this is a no brainer.
Intel Corp. is trying to recapture lost market share at low end of the desktop PC market, sources in Taipei, Taiwan, told the IDG News service, by accelerating release dates of its Celeron processors. By mid-1999 the chips could speed to 433 MHz from today's 333 MHz.
Intel early next month will debut the first Celeron chip in a new 370-pin socket packaging at speeds as high as 366 MHz, with a 400 MHz version to follow by March and a 433 MHz iteration scheduled for introduction late in the second quarter, said sources at Taiwan chip and motherboard makers. An Intel spokeswomen confirmed such chips would ship next year but wouldn't confirm the schedule.