If the Margin were 60%, the profit would be down $30M on a revenue reduction of $50M.
Thanks for the correction. This further illustrates my point that revenue can be flat, individual group margins can be up, and profit can be down, which is why I think Q2 will be roughly flat profitwise.
MPU Sales Down In Q1; Intel, AMD Hold Share By Mark Hachman April 20, 2004
"Unit shipments of PC microprocessors slipped more than expected during the first quarter, new research data revealed Monday, while Intel Corp. and Advanced Micro Devices Inc. held on to their market share. Microprocessor unit shipments declined 7.9 percent to 48.7 million, lower than the seasonal average of about 5.0 percent, according to data from Mercury Research Corp., Cave Creek, Ariz. Mercury's data was published in a research report by The Goldman Sachs Group, a Wall Street analyst firm.
Historically, first-quarter sales and unit shipments are lower than during the third and fourth quarters, when sales peak. Although Intel reported a healthy quarter, inventory levels rose to unexpected highs when customers stopped buying products. AMD, meanwhile, recorded strong first-quarter sales that were even higher than in the fourth quarter.
"The (overall) market itself should come as no surprise," McCarron said. "Intel reported worse than seasonal results, and AMD -- they didn't experience that fact given that they have the Athlon64 and Opteron products still coming on line."
Intel retained its stranglehold over the PC microprocessor industry, as the company's market share slipped only a tenth of a percentage point to 83.6 percent of the units sold. In turn, AMD also stole less than a percent of marketshare from its rival vendors, increasing its share from 14.7 percent in the fourth quarter to 14.9 percent during the first quarter.
Although the back-and-forth in market share data is important for both companies, of more significance is AMD's success while still maintaining profitability, McCarron said.
"What really changed with AMD is that they're doing a really good job in managing their pricing -- it was a chronic problem for them literally for years," McCarron said. "They'd be selling their products at very steep discounts. Now, they're not so focused on share at any price, but on sustainable processes. Hector (Ruiz, AMD's CEO) talks about the 'new AMD' in the conference calls, and that's actually a credible statement."
Intel, however, has shifted a significant portion of the company's focus to the notebook PC market, which showed the most upheaval. There, Intel's Centrino products helped Intel's share increase from 87.5 percent to 90.1 percent. AMD, meanwhile, saw its share fall from 11.6 percent to 8.4 percent. AMD also gained 1.7 percentage points from its rival in the server market; Intel now holds a 96.9 percent share in the X86 server processor market, compared to 4.8 percent for AMD.
Goldman Sachs also noted a 16 percent decline in PC chipsets, quarter-over-quarter, but postulated that PC OEMs were clearing out their stock of on-hand parts in anticipation of the launch of the Grantsdale and Lindenhurst chipsets in the second and third quarters, as well as new AMD chipsets expected in the second half of the year."
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