Just got off the INTC conference call, and remain somewhat baffled by the market reaction. As suspected, their forward guidance of higher revenues and margin was solely based on "normal seasonality", but they at least held it to the lower end of "normal". In other words they expect the second half to be better because that is the way it usually goes, even though it did not work well for this quarter. They said several times that they see no signs of a recovery or improvement in their business, which declined more than expected for this quarter.
A good note for the chip equipment sector, the cut in capex is expected to come from expenses other than fabs, so there will be little effect there.
Inventories are higher than they would like, but they hope to pare them down with a pick up in business in the second half without having to do a writedown. There has been a lot of pressure on ASP's and margins, but assuming business does pick up, they expect an improvement in margins. They are looking for the hoped for increase in demand to come from the business side, as the consumer has held up pretty well.
Personally, I think their forcast is at risk - I see no pickup in business spending any time soon, and expect consumer spending to slow down as the economy begins to slow. Moreover, I do not expect AMD to lie down and die for them and look for ASP's for both proccessors and flash to remain under severe pressure, preventing any improvement in margins. It would not surprise me at all for them to have to warn again at their mid-quarter analyst update.
But, as always, it is not what I think, but what the market thinks that matters, and we will know more about that tomorrow.
mlsoft
AI
