THE
TMF TAKE
Money
news you can actually understand.
Intel,
AMD and PC Makers
By Brian Bauer, Bob Bobala, Robert Brokamp, Jeff Fischer,
Tom Jacobs, Bill Mann, Selena Maranjian, Rex Moore, Dayana
Yochim
January 7, 2002
For
the first time this year, the major market indices all
hit the red. The Motley Fool 50 index fell 1%. Three hundred
and forty-eight more days left to watch the market --
and eat, sleep, play Ping-Pong, visit the Grand Canyon,
finger paint with your kids, take out the trash, eat pie,
and do whatever else you have to do, Fool.
In today's Motley Fool Take:
Intel vs. AMD: The Fast and the Furious Pieces Coming
Together for PCs New CEO Joins Lucent Shameless Plug Dept:
A Year's Worth of Stock Ideas Quick Takes: Ford, Corning,
Circuit City, much more And Finally... Intel vs. AMD:
The Fast and the Furious
In the footrace for faster processors in the personal
computer industry, there is never time for a breather.
Intel (Nasdaq: INTC) and AMD (NYSE: AMD) introduced their
latest high-end speed demons today. For Intel, its latest
Pentium 4 chip runs at a record 2.2 gigahertz -- or 2.2
billion cycles per second. On the other hand, AMD's Athlon
XP processor 2000+ promises superior performance.
Which one is better? Toss that question into a room full
of Intel and AMD loyalists and watch the fireworks fly.
AMD is fighting the conviction that it's all about the
megahertz -- which is why it now relies on naming its
processors by model number, not speed, and is seeking
more complete performance ratings.
Is that sour grapes or a legitimate beef on the menu?
Again, that's a follow-up for the Intel vs. AMD deathmatch
chatroom. While seemingly an objective question, it seems
to come down to something as subjective as the age-old
Gilligan's Island debate on Ginger or Mary Ann. For consumers,
what this ultimately means is that all of last year's
state-of-the-art processors are now Mrs. Howells.
The eventual markdowns will come at a welcome time as
computer makers have been struggling to move systems in
a price-conscious environment. Suffering its first sales
dip in 2001, once the suddenly obsolete inventory gets
cleared out it should create a friendlier climate for
the beleaguered sector in which value and performance
will craft a win-win scenario for buyer and seller alike.
They're talking about the new chips on the Intel and AMD
discussion boards. Feel free to join the conversation.
Pieces Coming Together for PCs
Aside from the Intel-AMD battle, there's some good news
from the PC industry today... and when's the last time
you heard that?
First of all, Compaq Computer (NYSE: CPQ) said its fourth-quarter
results will exceed its earlier expectations, enough so
that it will post a profit instead of a loss. Previous
guidance from the world's third-largest computer company
indicated a loss of $0.03 a share on revenue somewhere
between $7.6 billion to $7.8 billion.
Now Compaq, still fighting to get its proposed merger
with Hewlett-Packard (NYSE: HWP) approved, is looking
for about $8 billion in revenue, and a "profitable
quarter." CEO Michael Capellas attributes the good
news to "strong execution and Compaq's solid momentum
in the marketplace."
Also this morning, Dell Computer (Nasdaq: DELL) saw its
shares nudge upward after an analyst report of stronger
demand for its products in the U.S., Europe, and Asia.
Do today's developments signal a turnaround for the beleaguered
industry? It's too early to say, but it does appear the
bleeding has stopped for the time being.
New CEO Joins Lucent
From the files of "Out of the Frying Pan and Into
the Fire": Good luck, Patricia Russo! Ms. Russo is
jumping ship from beleaguered Eastman Kodak (NYSE: EK),
where she has been president, to the arguably more-troubled
Lucent Technologies (NYSE: LU), where she will serve as
CEO. Russo is an AT&T/Lucent veteran, with 19 years
of experience there. This isn't good news for Kodak, which
she joined just nine months ago. Perhaps it will be good
for Lucent, which has had Henry Schacht manning the helm
as interim CEO ever since the company fired Rich McGinn
for a multitude of sins last year.
Schacht will return to his position as Chairman of Lucent.
We certainly hope that the Lucent board uses more discretion
this time around than it has with executive compensation
in the past: McGinn received a $5 million severance package
after nearly running the American icon into the ground
with such unwise investments as a company golf course.
Shameless Plug Department: A Year's Worth of Stock Ideas
We've put two of our best products together: Industry
Focus 2002, our annual look at companies set to deliver,
and The Motley Fool Select, our monthly collection of
stock ideas. If this timely bundle doesn't revitalize
your portfolio, it's safe to say you should be sticking
with index funds. (And there's nothing wrong with that.)
Quick Takes
Ford Motor Company (NYSE: F) CEO William Ford, Jr. noted
that some restructuring and cost cutting is in the works
as he steers the company toward what he sees as certain
profitability. Specifics should be rolled out within a
few days. In the meantime, enjoy some photos from the
2002 North American International Auto Show in Detroit.
The airline biz isn't exactly soaring right now, but there
are signs that it's slowly gaining altitude. Overall December
traffic was down only 14% over the year-earlier period,
compared with 20% in November, 26% in October, and 34%
in September, according to industry trade group Air Transport
Association.
There have been few encouraging words for Fiber-optics
fans recently, but they're getting some now. Corning (NYSE:
GLW) has announced plans to re-open several manufacturing
plants on a limited basis, signaling that a recovery for
the sector may be in the offing. Quoted in The Wall Street
Journal, Corning spokesman Dan Collins noted that, "We've
worked down inventory and are beginning to ramp up manufacturing
capacity to meet customer demand."
Shares of Circuit City (NYSE: CC) rang up today, as the
company reported a 10% surge in sales for December over
last-year's levels and waxed optimistic about the company's
near-term future.
The Washington Post is running a four-part investigative
series on MicroStrategy (Nasdaq: MSTR) and CEO Michael
Saylor that investors will likely find interesting. Parts
1 and 2 have run so far. Some lessons: Too much power
in one man's hands can devalue any public company; and
auditors can be far too sloppy the first time around.
The Post is also running an article reviewing what was
a bad year for mutual funds , as well as for the overall
market.
The most-ludicrous-column-of-the-day award goes to MarketWatch
(Nasdaq: MKTW). In the "technical analysis"-heavy
" Has J&J run its course?," we read sentences
such as, "The key to the 'double top' [in Johnson
& Johnson's (NYSE: JNJ) stock] is actually the dip
in between, because until support there gives way, the
pattern is not confirmed." The column also laments
that J&J has suffered a "four-day slide of 2.9%"
(dubbed a "reversal process") and then suggests
the stock may be all but finished. The stock indeed may
not rise for a while (who knows), but (as with all technical
analysis) the underlying 120-year old company and its
long-term appreciation history were completely ignored.
And Finally...
Today on Fool.com: How do you a spot a real bargain stock?
And how do you tell the difference between a bargain and
a stock that's down and not getting back up? Tom Jacobs
begins to look at those questions and more in the Fool
on the Hill.... If you could bring your own brand of justice
to Enron execs, what would it be? Let us know in our new
contest and you could win a free year of TMF Money Advisor
and possibly $500 in cash.... It's always gratifying to
find a Fool succeeding in his or her financial goals.
Here's one who recently got out from under $74,000 in
debt.
Contributors:
Brian Bauer, Bob Bobala, Robert Brokamp, Jeff Fischer,
Tom Jacobs, Bill Mann, Selena Maranjian, Rex Moore, Dayana
Yochim
Published on January 7, 2002
