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High-tech vs. cheap-tech

Discussion in 'Intel' started by bbbl67, Apr 6, 2006.

  1. bbbl67

    bbbl67 Guest

    An interesting viewpoint from an analyst firm about why HP is doing
    well, Dell is not; and why AMD is doing well, but Intel is not. It was
    written in Barron's.


    Technology Tilts to Upscale

    Caris & Co.
    1250 Broadway, 27th Floor
    New York, N.Y. 10001
    (Tel) (917) 464-1600

    THERE IS A POWERFUL DYNAMIC in the technology business that is required
    to explain many recent developments -- at times customers actively seek
    out more-expensive and more-capable products while shunning lost-cost
    products that are viewed as obsolete. In periods of rapid change, like
    now, many people will spend more to buy "future" protection.

    This preference for high-tech over cheap-tech is clearly evident in
    today's PC and server markets -- to the advantage of Hewlett-Packard
    and the detriment of Dell -- as well as in the television-set market to
    the benefit of Sony and in the smartphone market benefiting many,
    including Palm, Research in Motion, Motorola, Nokia, Sony-Ericsson and
    Qualcomm.

    This tilt toward high-tech is likely to stretch into 2007-2008 and
    possibly beyond -- depending on the pace of the combined upgrade cycles
    to Windows Vista, Virtual Computing, high-definition media and
    smartphones. Each of these upgrades is massive on its own and arguably
    without precedent in the respective markets. Taken together, this broad
    upgrade cycle -- to support the global expansion of digital services --
    is the most important change in technology in the past five to 10
    years, in our opinion.

    Recent reports of inventory buildups and potentially missed quarters in
    PCs have been combined with wildly contradictory indications of
    component shortages and rising final product average selling prices.
    What's going on here? We believe the best explanation is that Advanced
    Micro Devices' high-tech is beating Intel's cheap-tech in the market --
    leading to misses for those dependent on Intel that have probably been
    exaggerated by AMD's "sold-out" condition.

    Another potential casualty of this high-tech tilt is Apple Computer.
    Dependent on subsidies to maintain its Macintosh margins, Apple has
    switched from IBM's subsidy to one from Intel. Unfortunately, Apple's
    high-prices are exposed now that its 32-bit Intel products are
    demonstrably inferior to competitors using 64-bit AMD microprocessors.
    The ability to run Windows XP -- via the just introduced "Boot Camp" --
    on a Mac is likely to lead to a series of unfavorable comparisons,
    highlighting Apple's weakened competitive position as the PC world
    moves past XP toward Vista.

    We recognize that investors who have been trained to only expect steady
    price declines and even price wars will find this shift towards
    high-tech counterintuitive. As a result, many may be inclined to miss
    opportunities and/or to exit strongly performing stocks too soon.

    We suggest that H-P's aggressive use of high-tech AMD in both its PCs
    and servers will be a continuing reason to prefer its stock to its
    cheap-tech rival Dell.
     
    bbbl67, Apr 6, 2006
    #1
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  2. bbbl67

    HomeLess Guest

    when was this written ?



     
    HomeLess, Apr 8, 2006
    #2
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  3. George Macdonald, Apr 8, 2006
    #3
  4. bbbl67

    nobody Guest

    nobody, Apr 8, 2006
    #4
  5. Depends what you mean by interesting. If I put on my disinterested hat --
    oops it's a little wobbly :) -- this is no better nor worse than the
    articles which are saying the opposite and panning AMD/praising Intel. The
    authors have to have err, research which supports:

    "Caris has "buy" ratings on Hewlett-Packard (nyse: HPQ - news - people
    ) and AMD, an "average" rating on Dell, and a "below average" rating on
    Intel (nasdaq: INTC - news - people )."

    While AMD fans, especially those of us with AMD stock, would like to
    believe it, in the end is all so much anal...yst BS... the
    "greed"/retirement industry at work.;-)
     
    George Macdonald, Apr 8, 2006
    #5
  6. bbbl67

    HomeLess Guest

    Thanks. It is recent, just wondering if the market had a couple days
    to react. Then again it may not matter as W., after the bell is
    earnings. Easy bet it'll move 2 bucks +
     
    HomeLess, Apr 8, 2006
    #6
  7. bbbl67

    Judd Guest

    HP is doing well? HP is laying off 15,000 employees. They are sunk. I
    would take their stock if someone gave it to me, but I'm not buying it.
    Other than printers, they are not a good buy. Their retail channels
    commoditize their products and the margins are very slim. Dell is much
    smarter to keep doing business there way and wait out the storm. It will
    pay off soon enough.
     
    Judd, Apr 9, 2006
    #7
  8. bbbl67

    nobody Guest

    The anal...yists have their own set of benchmarks. Laid off 15k
    expensive Americans and/or Europeans? Good - they save on wages and
    benefits. Sent the work to dirt-cheap Indians/Chinese? Good.
    Customers p!$$ed off by Indian call center @$$holes? No problem. Paid
    outsize bonuses to execs? Good - it is called talent retention expense
    in anal..yist speak. Spent money on R&D? Baaaaaaad!!! - that's waste
    of valuable and limited resources.
    ;P

    NNN
     
    nobody, Apr 9, 2006
    #8
  9. bbbl67

    Judd Guest


    LMAO!!!!!!!!!!!!!!!!!!!!!!!!!
     
    Judd, Apr 10, 2006
    #9
  10. bbbl67

    Yousuf Khan Guest

    True enough.

    Yousuf Khan
     
    Yousuf Khan, Apr 10, 2006
    #10
  11. bbbl67

    bbbl67 Guest

    The 15,000 laid off is old news, happened about a year or two ago. Now,
    it is doing rather well.

    Yousuf Khan
     
    bbbl67, Apr 10, 2006
    #11
  12. bbbl67

    Tony Hill Guest

    The lay-offs were only announced after Mark Hurd took over as CEO last
    summer, and they were expected to take 18 months. HP is only about
    halfway through this round of layoffs.

    As for "doing rather well", they are at least making money, though not
    anything to get too excited about. For the last quarter of both
    companies, Dell's net earnings were $1.012 billion on revenue of
    $15.2B. HP's earnings were $1.2B on revenue of $22.7B, so Dell's
    profit margin is actually better than HPs.

    Doing a comparison by product lines is a bit trickier because Dell
    doesn't seem to be reporting earnings by product like HP does.
    However it is clear that HP's largest money-maker is their Imagine and
    Printing group, with $973M in profit. The Personal Systems Group
    (desktop and laptop computers) only had $293M in profit while
    Enterprise Servers and Storage managed $326M in profit. Note: these
    numbers may not necessarily reflect the $1.2B total profit above due
    to differences in accounting.

    Anyway, the point being that it's tough to say that HP is doing rather
    well while Dell is in bad shape. Any anal...yst doing so is probably
    just trying to pump up whatever stock they need pumping at the moment.
     
    Tony Hill, Apr 11, 2006
    #12
  13. bbbl67

    Yousuf Khan Guest

    I don't think it's necessarily an analyst trying to pump a specific
    stock, as much as it is just coming up with a hypothesis behind some
    stock price directions recently. During the past couple of quarters, HP
    has rocketed after their earnings reports, while during the same period
    Dell has plummetted. Investors are reacting to something that's
    relatively different between them, and I think it's probably the
    product mixes. Other than product mixes, their numbers aren't too far
    off of each other.

    Yousuf Khan
     
    Yousuf Khan, Apr 11, 2006
    #13
  14. bbbl67

    Judd Guest

    That would be incorrect Youssuf. I know several HP engineers that won't get
    the can until November. They have only laid off about 5000 of the 15000.
    There will be 5000 this summer and 5000 again in the late fall/winter.
    Trust me, things are just now starting to hurt for them. They are not doing
    rather well at all. They are downsizing products and the brains that build
    them. They are turning into Packard Bell. In fact, their new name should
    be Hewlett Packard Bell. I can't believe you think they are doing well.
    They are not! There cash flow is very small comparatively and paying
    millions to worthless execs that lost them big money didn't help.
     
    Judd, Apr 12, 2006
    #14
  15. bbbl67

    Judd Guest

    I'm telling you now, wait until the 1st quarter next year. HP is a bad,
    bad, stock.
     
    Judd, Apr 12, 2006
    #15
  16. bbbl67

    Tony Hill Guest

    It's not just the last quarter, HP's stock has gone up pretty
    consistently since February of last year when they gave Carly the
    boot! Product mixes might have something to do with it, but I think a
    lot more of this stems from corporate restructuring.
     
    Tony Hill, Apr 12, 2006
    #16
  17. Talking of err, Carleton... I see she just got appointed to TSMC BoD. I
    still can't figure how that stuff works... bounce from one corporate
    disaster site to another for 20 years or so and you end up with offers of
    plum sinecures. Tell me it's err, the Lizard people.... please.:)
     
    George Macdonald, Apr 12, 2006
    #17
  18. bbbl67

    Keith Guest

    Hell, we've still got our lizards. These same folks were just telling us
    how well our customers are doing (up 40% here, 35% there) and I turned to
    a former boss and said, yeah and we get 0%. ...or less. Me bitter? Not
    a chance. I'm over the hump.
     
    Keith, Apr 13, 2006
    #18
  19. bbbl67

    Del Cecchi Guest

    They must have been paying you enough. You didn't quit.

    del
     
    Del Cecchi, Apr 14, 2006
    #19
  20. bbbl67

    Keith Guest

    Quit? Not until I got what was "promised" me. I would have been *long*
    gone with the deal the newbs get. Us old bastards have the locked-in
    bennies. ...as long as the company survives, anyway.
     
    Keith, Apr 14, 2006
    #20
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