INTEL CONFERENCE CALL
"Revised Outlook for Q1 Earnings"
Thursday March 8, 2001
3:00 PM PST
(the transcription ain't perfect! -- jg)
Speakers:
Andy Bryant
Senior V.P.
Chief Financial Officer
Sean Maloney
Executive V.P.
Director, Sales and Marketing Group
(introduction of Investor Relations person)
(introduction of speakers by Investor Relations person)
AB: we see weakness in almost all INTC products, not only processors, but
also flash, networking... higher than normal inventory... reserves for
older-generation flash and some networking stuff is higher than normal...
reserves for uP's are at high end of expected range... deferring pay raises
for big-shots until October... restricting hiring... no more free PC's to
employees... income from investments this Q $180M, no change from prev
estimates... cap spending unchanged from $7.5B... "current climate is grim"...
"but recessions always end"...
SM: telecom has cancelled large orders, and pushed out orders from Q1...
flash outlook is based on cell-phone usage... server segment dropped more than
desktop and mobile segment... chipset inventory is generally acceptable...
difficult to predict 2H demand...
Minnie Shmale (?): what has changed in flash?
SM: slowdown in PCs, and slowdown in cell-phones.
Charlie Gladdin, CSFB: P4 ramp? non-Rambus alternatives? will INTC do
Rambus chipsets, or will 3rd party?
SM: P4 ramp is going as expected...
AB: we will build inventory this Q... we will need more capacity in 2H
Dan Niles, Lehman Bros: extrapolate Q1 margins to Q2 and rest of year?
AB: not ready to give long-term #'s... margins will follow revenue...
DN: how much reserves (inventory?) ?
AB: not willing to say...
Mark Edelstone, MSDW: when was last time units were at this level?
AB: dunno... blah blah blah... if only PC sales were down we wouldn't be
having problems, but it's servers too...
(?) headcount?
AB: 88K-90K
(?) will advertising $ drop now?
SM: no plans for cutbacks
David Wong, UBS Warburg: significant decline in PC ASPs?
SM: no
David Wu, ABM AMRO: long question about margins, Zenon processors?
SM: dot-com problems, not as many servers sold
Terry Ragsdale, GS: PC ASP's going forward
SM: difficult to give projections, slowdown in servers
Dan Scoville, (?): any signs of recovery?
SM: no, tough to guess, 2H recovery (yet again -- chanted monotonously like a
magic spell -- jg)
DS: booking levels?
AB: depends on overall demand, we look at GDP, consumer confidence, etc.
DS: any reason for us to expect that 1Q will be a bottom?
AB: don't want to speculate
Joe Osha, Merrill Lynch: I am surprised to hear it is non-region-specific, are
Europe and Asia just as bad as US?
SM: Europe has been uninspiring for some time, we are seeing cancellations
from every area...
JO: would you characterize weakness in Asia and Europe as emerging, or
continuing?
SM: (mumble mumble)
Eric ?, Robbers & Stealers: P4 ramp is scheduled for next year, but will you
pull it into this year though?
AB: unlikely
(?) update us on outlook for depreciation?
AB: $4B this year, no change from prior guidance, no # for 2002 yet...
depreciation is not a function of revenue...
Graham Tanaka, Tanaka Capital Mgmt: how long to work off inventory?
SM: we have two new architectures, strong growth there... strong in optical
networking...
Peter Vanderlee, SSB: is Europe getting worse?
SM: Europe PC growth is worse than Asia, US... we need to look closely at data
coming out in next few weeks...
PV: both consumer and business?
SM: biz sales have been uninspiring for 3 Q's...
Dan Brady, Presidio Mgmt: (lost)
Bear Stearns: (already answered)
Drew Peck, SG Cowen: there have been more price cuts than I can remember,
and deeper, have they all been accounted for?
SM: I take issue with "deeper", high-end prices are holding up...
DP: quantify "top of inventory range"?
SM: blah blah evade
AB: we won't give specific information
Dan Niles: why would this be just a 2-Q long phenomenon?
AB: seasonal pattern, measure 2H vs 1H, we assume economy will stabilize
DN: how much of 25% decline is inventory reduction (lack of channel stuffing?
-- jg)
SM: demand isn't what we want, inventory levels are low, people will go with
our new technologies, we are ready with new products |
