Another reference point on the Intel warning tonight by Briefing.com. States tomorrow should be a very interesting day.
19:02 ET ******
Intel (INTC) 27.00 -1.18: Perhaps this is the capitulation everyone has been seeking in order to establish a near term bottom. We hope so, but if nothing else, expect some selling pressure at tomorrow's open. In its highly anticipated mid-quarter update, Intel guided lower. The company sees Q2 revenue of $6.2-$6.5 bln vs the current consensus estimate of $6.7 bln and below previous guidance of $6.4-$7.0 bln. A less rich product mix and weakness in Europe are being blamed. EPS guidance was not provided, but if you use the midpoints of Intel's revenue guidance ranges, a reasonable EPS estimate is $0.10-0.11. Look for the current consensus of $0.15 to come down to that area in the pre-market tomorrow. Merrill Lynch downgraded the stock this morning so the warning was not much of a surprise, but the magnitude of the warning was more than expected. What caught our eye is the big miss in gross margin to 49% from 53%, give our take 2 points. That's a pretty big miss for a company the size of Intel. As such, the stock is selling off to 24.40 after hours...Intel still says it expects a seasonally stronger second half, though traders are still nervous. On the call, management tried to appease the Street that the miss may have simply been a result of building inventories from a strong Q1, rather than an end demand problem. Mgmt said consumption was on track....This clearly is not good news for the semiconductor and semi equipment markets. We have been somewhat cautious on Intel for a while, and see little here to change that assessment as it appears that the recovery everyone was hoping for will take longer then planned. It'll be interesting to watch the market tomorrow and see if the prognosticators will call this the capitulation needed to move the market higher. Either way, it'll be an entertaining session tomorrow. -- Robert J. Reid, Briefing.com |
