Intel Corporation (INTC) Message Board

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Technology Stocks : Intel Corporation (INTC)

INTC 48.32

-0.8%

3:59 PM EST

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To: Saturn V who wrote (178659)	7/16/2004 4:48:08 PM
From: GVTucker	Read Replies (2) of 186894

Saturn, RE: The response to Intel's Earnings is irrational. The inventory increase was due to higher yields, and not due to a lack of demand. So the higher yield will eventually translate to higher profits downstream. The higher inventory is clearly a problem if it is due to a reduction in customer demand. But such is clearly not the case. Then you misunderstand the Street's reaction. The inventory hasn't caused a demand worry. It has caused a margin worry. Most every analyst who upgraded this stock last year did so because they thought that margins had risen to a new level. That is apparently not the case. A lot of that increased margin has translated into inventory. Note that management guided margins lower for the rest of the year. Also note that the analysts have adjusted revenue expectations upward, showing that they believe management's demand expectation. Granted, I think that the Street has indeed probably overreacted to the Intel earnings report, yes. But I don't think that the reaction has been irrational.

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