Replies to post #70054 on Intel Corp (INTC)

[willco]

You are right on that a lot of Asia sales are eventually US bound. That is why the rest of the world is tanking faster than we are. When we catch a cold they get pneumonia.

[Sarmad]

>> You have to be careful with simplistic analysis like this.
A large chunk of Intel demand in Asia is from board and
system makers who sell heavily back into the U.S. The
U.S. represents nearly a third of the world's spending on
IT related products and services last I heard.
<<

I am pretty sure Paul Otellini said multiple times during q2 and q3 interviews that end user demand in the US for Intel was 23%.

In the Q2 report, Intel stated that the geographic distribution of revenue for Americas was 21%.

In the Q3 report Intel's geographic distribution for Americas is 19%. (Down 2 points from q2).

So the end user demand of 23% (from P.O.'s interviews) corresponds with Intel's report of 21% geographic distrib. The small disparity is likely caused by mix of high end vs low end, or the fact that Mac PC's are more popular in the US than Asia.

This question has come up on this board before. It may well be that for combined IT spending US accounts for a third (lots of high salaries), but for PC's it is clear that US PC shipments are approx 21% of total PC shipments world wide. (16 million US,out of 72 million world).

This is according to Gartner:

STAMFORD, Conn., July 16, 2008 — Worldwide PC shipments reached 71.9 million units in the second quarter of 2008, a 16 percent increase from the second quarter of 2007, according to preliminary results by Gartner, Inc.
...
PC shipments in the United States reached 16.5 million units in the second quarter of 2008,

http://www.gartner.com/it/page.jsp?id=724111
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[morrowinder]

Chipguy: yes this is true but...

The US market=US retail/consumer and IT. IT is definitely the more significant part.

I would expect IT to be flat to down but it won't be that bad.

US retail on the other hand is a different situation.

Facts about US retail:

it has steadily shrunk as a portion of intel revenue. At one point it accounted for 10% of intels earnings a long time ago but that is no longer true.

AMD has been very competitive there for years. Generally Intel battles it out of MSS and the weaker of the two has to discount heavily to win designs. HP is a huge factor here. They dominate US retail sales. And they favor AMD for notebooks and desktops typically, especially at the lowend.

US retails ASPs are awful. Desktop prices have steadily fallen of a cliff(thank you walmart/best buy). Laptops made up for this but now they are going down the toilet as well.

Intel is investing less and less in US retail.

SO if demand tanks in retail it will hurt intel a little. But it will hurt AMD more. You can judge for yourselves. Black Friday is coming up soon and no doubt best buy and walmart will give away the farm to generate demand. If it doesn't work discounts will increase throughout christmas.

Bottom line: US retail will probably be pretty ugly this year. But there could be decent volume on the lowend. People like Sony and Apple could face some bigger dropoffs if people close their check books.

The good news for intel is this is not a growth area for them and it has steadily been outgrown by latin america, APAC, russia etc...so I don't believe it will hurt that badly.