All,
Intel is currently at $83 in after hours trading. However, having now had the opportunity to listen to the conference call, there is no way INTC will not go up big tomorrow. Not only did Intel's Q3 earnings beat First Call's estimates by more than 10 %, ($.89 vs $80), but revenues increased more than 14 % above Intel's previous guidance of 8 to 10 % over Q2. Intel stated during the conference call that they had now succeeded in working down inventories, had seen unexpected demand for their products in the month of September, and that this strong demand continues into the month of October. Looking forward they said that they expected revenues to increase in Q4 and that margins should also continue to improve to above the 53 + % achieved in Q3. The 53 + % in GPM was 2 basis points above what analysts had expected before tonight's release.
For me though, after listening to Andy Bryant on both CNBC earlier tonight and on the conference call later on, was his statement that ASPs have remained flat for the last 5 quarters. In addition, I thought I heard him say during his interview on CNBC, that ASPs in Q3 were up slightly. This was a very important point as it debunks Tom Kurlak's major premise that Intel's ASP's have been steadily coming eroding. Further, and even more impressive was the fact that there were four times as many Celerons shipped in Q3 then there was in Q2. Therefore, the conclusion one most draw, (even Tom K.) is that the shipments of higher priced Xeons more than off set the deterioration of low prices at the low end. Additional cause for optimism going forward, was the fact that Xeon shipments are first now ramping up, and the fact that Intel indicated that for the first half of this quarter at least, demand for their chip is greater than their ability to produce.
Congratulations to everyone who held on to INTC and kept the faith during these difficult times. Assuming the market doesn't crash in these next few days, we are now about to be rewarded.
Jules |
