wbmw,
Good point. In that case, it sounds like AMD already anticipated a bit of pricing pressure. That makes them somewhat "safe" in their Q2 results, but the reaper will catch up to them sooner or later. I'm guessing if they guide poorly for Q3, or guide well and then hit poorly in Q3, it will be the first of the huge chunks to be taken from their share price.
That may very well take place. Q3 will not be very different from Q2.
If you recognize that Intel is trying to unload inventory, then you should already accept why some CPUs are being sold at VIA sized prices.
The inventory level may be higher than needed, but you must stop producing identical chips if you want to claim invenory reduction is taking place. Otherwise it cutrate pricing is not a inventory management move.
The alternative is not to sell them at all and recoup $0 of the lost manufacturing costs. Personally, I think investors ought to be pleased that Intel can get $30 for something that is essentially worthless.
Not if you are producing identical replacement, which again will have to be sold for $30 just to recoup the manufacturing costs.
The alrnative is to not offer chips for $30, but at a more normal (at least for Intel) price of $50 to $60.
The result would be maybe a slight loss of the unit market share, but higher revenues, higher profits, and less pain and suffering for Intel shareholders.
It's unclear how much more pessimistic the street can turn as far as Intel goes. It is definitely the year of the bear for Intel, with expectations bordering on sheer absurdity. If someone were to bet that Intel would be taken lower, simply because they've fallen so far already, I think that would be more idiotic than holding until the results speak for themselves
Intel makes a lot of money, which does provide some safety net. But the problem is the string of dissappointing results and that the turnaround is not imminent. I think Intel will finally post good results for Q4 2006 quarter. Q2 will be bad, Q3 only seasonally higher (if that) than Q2. There is a long time between now and January 2007 Q4 CC.
That's not really fair, since the alternative is to lose even more market share as the industry continues to perceive AMD's industry leadership. Intel can't just shake the benchmark results in people's faces and expect immediate results; they need to offer a no-brainer value in both performance/watt, and also performance/$. Intel is cutting prices so that people who have turned to AMD over the past couple of years do not hesitate to turn back to Intel.
Therefore, the $37.99 Boxed Celeron is a planned, deliberate strategy to trade revenues, profits, falling stock price for unit market share.
Joe
