AUSTIN -- Well, Nellie waited 'til the sun shone, Santa delivered a nice little rally, and we made it to Christmas intact. Thanks, Mr. Claus. And
. Four items to ponder over the week between Christmas and New Year's:
Tom Kurlak finally caved Wednesday and bumped his
target up to 144 on a day when Intel closed at 119 -- and then gained 6 1/2 more to close at 125 1/2 on Thursday. Kurlak was one of the last bears on INTC, and his move was interpreted as a confirmation of the generally held view that INTC is set for a bang-up year in 1999. Yes, but, but, but. I do worry a little about INTC's near-term future. I think we'll see the stock drift up to something like Kurlak's estimate, maybe even to 150, but I also think INTC is in for a competitive whack in 1999 -- likely a good year, or at least a good first half, for chipmakers -- delivered by
Advanced Micro Devices
. AMD has done exceptionally well as a supplier in the under-$1,000 PC market, and anyone who thinks that market is going away is nuts. In fact,
, the joint venture between Korean PC maker
and monitor maker
, which introduced the $399 PC for the Christmas season, is determined to keep pushing product at the low end. If they can ramp up production enough to actually get enough units on the shelves -- a problem for them in November and December -- they are going to sell a lot of boxes. So far, e-machines has used
CPUs in their $399 units and Intel Celerons in their $599 machines. But I hear whispers of a move to AMD chips for their new machine, due out in a couple of months, based on
iMac. That's right: e-machines is doing an "iMac-alike," all-in-one, high-style Windows machine. For, e-machines says, less than $799 street. Just offhand, do you think that's going to be a smash hit¿? AMD is heading into what looks like a "good-news cycle." According to a
story on Christmas Eve from Robert Lemos at
, 16-year-old California high-school student Anand Lal Shimpi got his hands on a preliminary engineering sample of AMD's new K6-3 ("Sharptooth") CPU and published tests on his
Web site, story. The tests show very good performance from what will be the new top of AMD's line (and thus, of course, not a candidate for low-end PCs such as the e-machines boxes). The teenager's tests show the K6-3 besting Intel's top chip, the 450 MHz Pentium II, by 10% or so -- and as
Dean McCarron emphasizes in the story, final silicon, due in January, should be faster still. We should remember the source here and the tentativeness of these possibly ephemeral "tests." But they match what I've been hearing from friends at AMD's big Texas fab, down the road from my office. I think INTC's going to do well in 1999. But I'd take it in tandem with some AMD, too. Intel's betting its 1999 results on sales of the hot Xeon chip, which is targeted at workstations and servers; that's going to leave room for AMD to move in on not only the low-end market, but also on the fat middle. Intel's successive releases of upgraded Celerons will still do well in that space, but AMD looks headed for a very good year. Because of AMD's focus on consumer and price-sensitive small-business PC markets, it should also get some sheltering from what I think will be a slowing of the business PC market in 1999, as corporate buyers divert funds from capital acquisitions to services, working on Y2K remediation. (Watch for my year-end Y2K column here shortly.)
Some of the December run-up in e-commerce stocks was due to the high anticipated (and real) Christmas sales over the Web. I'm not the first to observe that there is a high correlation between the customers of the major e-commerce sites and the buyers of their stock; "buy where you shop" was at work. Look for that to continue in the historically hot week between Christmas and New Year's. But I won't be surprised if we finally see some easing of the e-commerce stocks during January, minus those Christmas-shopping sessions. Ditto the prices of the online brokers, which enjoyed spectacular run-ups during Christmas week.
ran their own private Santa Claus rallies, all up sharply. A slower January may take them down a little, too.
We'll see an interesting test of the market's vision or myopia in January, when and if, as planned,
goes public, under the aegis of
Morgan Stanley Dean Witter
. The Newton, Mass.-based company is a longtime pioneer and lately a market leader in the speech-recognition software business. Speech-recognition is absolutely going to be a huge market; speech is the natural user interface for so much of what we do with computers. Dragon is a leading player and a likely acquisition candidate, I think, within a year after the IPO. There's no .com action here; Dragon doesn't even sell its software (except for upgrades) on its Web site. But its NaturallySpeaking line, now in release 3.0, has long been the performance leader in speech-recognition software. I've been a user for about four years, and it's been satisfying to watch the product get better and better, from marginal to generally useful. Now
in the fray, too, with its ViaVoice line,
Lernout & Hauspie
is in with its Voice Xpress line, and
is toying with the market with its low-end FreeSpeech98 product. I see IBM and L&H's entry, with good products, more a validation of the market than a direct threat to Dragon. Dragon has also been playing the line-extension game with a vengeance during the last quarter; I count 10 consumer-level Dragon products now (most recently, and a measure of how far -- and how unfortunately -- line extension can be taken: Dragon NaturallySpeaking for Teens) plus a half-dozen developer packages. Drs. Jim and Janet Baker founded Dragon 16 years ago and have had a major role in pushing speech recognition into the realm of real usability. In a reorg announced on Christmas Eve, Jim has moved to the DH role of designated visionary (actually, chairman, Technical Advisory Board), while Janet has taken on the chairman and CEO jobs. John Shagoury, formerly COO, became president. For better or worse --
member alert! -- Kim Edwards, who pumped
up from $14M to $1.7B before its ugly fall from grace last year, has also just joined Dragon's board. Great products, great distribution, great press, great market opportunity. What will the market make of that next month? Is there hope for technology companies with real products and revenues in the .Com Era?
Finally, I wouldn't want you to miss Larry Ellison's graceless benediction for
down in Australia last week.
CEO Ellison, a.k.a. Mr. Charm, down under to sail in the Sydney Harbour yacht race, was asked about the future of Netscape. "The most innovative company in Silicon Valley," Ellison said, "has been completely destroyed by
. "The merger with
means Netscape is gone," he says. "AOL is in a different business. It is not a software company, but a media and a service company. AOL is not interested in Netscape's technology. It is only interested in
Netscape's Web portal." Thanks, Larry. We needed that. Peace and love.
Jim Seymour is president of Seymour Group, an information-strategies consulting firm working with corporate clients in the U.S., Europe and Asia, and a longtime columnist for PC Magazine. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At the time of publication, neither Seymour nor Seymour Group held positions in the companies discussed in this column, though positions can change at any time. While Seymour cannot provide investment advice or recommendations, he invites your
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