Intel Corp (INTC)

[Dan3]

Intel sitting out 2006?

They've started borrowing money at a rate equal to 2/3's of their earnings on a quarterly basis.

Apparently they now know what they'll have next year, and what the competition will have next year, and so they're going to the banks to keep their financials sound.

AMD's new, higher capacity FAB went on line last month and output starts showing up next quarter.

Looks like Intel is convinced 2006 is going to be an "Annus horribilis" for them and it's easy to see why.

The mainstream press is starting to pick up on Yonah not being able to run Windows Vista, expected to be the big driver of sales next year. If notebooks stops being a big profit center for Intel, what's left? Intel has already described the server market as being "hand to hand combat" for them and their products.

It's key to keep in mind that when Intel loses a CPU sale, it usually also loses a chipset sale and often loses a motherboard sale.

So loss of a $100 to $300 CPU is multiplied by the loss of a $35 chipset sale and the value added on a $100 to (in the case of servers) $500 motherboard sale.

So Intel is having to run to the banks to keep their financials from sagging.