INTC made low end of revenues, but missed earnings by 2 cents. Additionally, they lowered capex to between $5 and 5.2 billion and plans to cut their workforce by 4000 workers, both actions not normally associated with a company expecting things to get better any time soon. What is interesting is that guidance remained pretty much the same, meaning that revenues will be coming back up with higher margins for the rest of the year, a relatively rosy outlook.
I suspect that this is based on the standard INTC basis for guidance of "normal seasonal patterns", meaning that since sales usually rebound a bit in the 3rd quarter with somewhat better margins, it will do so this year as well. That has be the basis of INTC's guidance for a number of quarters now. My question is that if they really believe that, why are they laying folks off and cutting capex?? Another problem with the guidance is that it agrees with no one else in its sector both as to increasing revenue and rising margins, when every one else is seeing weakening, rather than strengthening demand. Methinks they are counting on a miracle or fibbing, one or the other.
I hope we will find out more details during the conference call, but so far the market seems to be happy with the news which would make my call on it completely wrong. My apologies.
mlsoft
AI
