Replies to post #12475 on Intel Corp (INTC)

[wbmw]

Andyk, Re: Even the chipset recall, which I didn't think would even cost $8M, turned out to cost $38M. Why?

Recalls are expensive. Besides the parts that Intel has to replace for their customers, they also have to junk anything they already made that was sitting in inventory.

Frankly, I don't think the recall is an important point here. I think the falling GMs are, which indicate competitive pressures, as well as the commoditization of the market.

Re: I was at first concerned about something like "NetBurst" marketing b.s. The fact that a marketing type is going to soon become CEO for the first time in Intel history is probably going to the last straw for me.

You are referring to Paul Otellini, but you are making an incorrect connection. Otellini is the one responsible for the "Right hand turn" to lower power processors (Centrino), not "Netburst". Albert Yu advocated Netburst, just like he did with Rambus, and that's why he was exiled to technical Siberia (also known as Opto-electronics).

I think Otellini's vision is good for Intel. Going towards a marketing direction is not bad when you are going up against the commoditization of PC processors, which is Intel's bread and butter. Intel needs more ideas like Centrino to take margins up to the 60% and above range, and I think Otellini is the right guy.

Right now, Intel is in a competitive slump that is hard to get out of. There is only so much that can be done when the entire technology pipeline needs to be flushed for something different. "Netburst+", a.k.a. Prescott was not such a good idea, since in hindsight we know that consumer power levels aren't high enough to exploit that kind of micro-architecture. Now Intel's roadmaps have to make due with what they have until the next micro-architecture is defined, and that takes several years. I suspect that Intel has already long since started the transition, but we may not see results in the next year or more until the new designs are fully developed.

Frankly, I'm not worried too much about Intel competing until then. Fickle investors will be the first to leave, and if you're not in for the long haul, you might want to bail as well. Long term, I think Intel will have much more competitive parts, and I think Otellini will be the one to come up with better ways to market these items to retain the margins that Intel investors have come to enjoy.

Just my opinion.

[The Duke of URL]

Some thoughts:

Andy: more revenue, but LOWER MARGIN products.

Intel's GPM is still very high. Taking out the channel payment marketing incentives and simultanesously lowering the price, will on its own reduce the GPM percentage, but in REALITY nothing changes.

Depreciation has started on all those new plants as they are put into service. This will lower paper profits but look at the cash mounting up.


Andy: Even the chipset recall, which I didn't think would even cost $8M, turned out to cost $38M. Why?

The 38 Mill is a guess, a reserve. The divider thingy was budgeted at 400 Million. Once the reserve it set up, all expenses are charged against it, but it is the reserve that reduces income, not the expenses. If too low, then increased reserve and reduce income, if too high, later, when you really know, then increase income, reduce the reserve.

Intel now controls the motherboard market, for the first time in a long time. What is a lousy 38 Mill?


Andy: I have been extremely bothered by the kind of investors that INTC has recently attracted.

Right on Bro!, I could not agree with you more. It is scary to me too, but for a different reason. Not many have a top sophisticated business and investment background, but it is the internet which will cast the sunshine on the scum slickers who have poisoned the stock market since its birth.


Andy: The fact that a marketing type is going to soon become CEO for the first time in Intel history is probably going to the last straw for me.

Well, have I got news for you!!! Somebody knows something at Intel! Barrett was a process plant manufacturing guy. Intel sees sales of a Billion!!! PC's buy maybe 2010.

Barrett did what he was supposed to do. He got the Intel machinie firing on all 8 cylinders.

NOW!, the board says, we need a guy like Otellini to sell this stuff.

Paul O. is the "father" of the banias and the wireless laptop thingy, which has allowed intel to take 90+ percent of the thin and light portable market.

Almost as if the board planned this EXACTLY!!!! :)))


Andy: Albert Yu.?

Albert is a friggin' genius, but it was under his watch that the 820 fiasco occurred.!!!!!

But, what would rudedog say???

[JMKel]

Yup! Those 60% gross product margin have me worried too. Intel will no doubt become a penney stock if their margins go to 59%.<g>

How about double the revenues and a GPM of 59.5%?

More BS from the ANALysts....