Intel Corp (INTC)

[highlandpk]

Now having said that, I am more optimistic that Intel will meet their guidance.

You have to look at it like this. The analysts are trying to model Q3 and Q4 sales with regards to the QoQ growth from Q2. Intel has had consistent seasonality in the second half of the year to the tune of 7-8%, but the analysts are noticing that in order to hit the yearly revenue guidance that Intel is projecting, the growth would have to be more like 15%, which they see as totally unrealistic, especially since they still believe that AMD is in a better competitive position (a fallacy they will begin to realize only after Intel delivers on their promise of market share recovery).

Intel has to Increase rev in the back half of the year by between 15-22% to hit their full year revenue marker - that is a very big ask when you consider what they have done over the last 3 years:

In 2003 we saw a 2nd half increase of 22% which at first glance looks like very promising support for your investment thesis. Do consider though that 2003 was a recovery year for semis and AMD was hardly competitive

In 2004 we saw a 2nd half increase of 12%

In 2005 we saw a 2nd half increase of 8%

It is pretty clear that AMD is doing a very good job of growing their business and at the same time causing real problems for the competition. It looks like the Turion is starting to put real pressure on mobile margins ($400 million dollar decline in operating earnings from a revenue drop of $50 million). The next high margin Intel segment AMD is targeting is the corporate DT PCs (corporate SKUs carry a 60% premium over their consumer counterparts). HP has just announced a big push in AMD based corporate PCs; nvidia is also on board. Intel is obviously concerned as they will be rolling out a new business platform in the near future.

The NGMA product will certainly help to stop the bleeding, but it will also highlight just how bad the current product is. The overall affect on top line growth could actually be negative until Q4/Q1 when volume is sufficient to offset the accelerating decline in netburst revenue.