Jules,
I was surprised that Intel didn't explain why they expected a flat quarter (other than they spoke with their customers).
If, as was stated in the conference call, the November price cuts are a "tweak" to adjust the August prices, then it seems strange that revenues would be only slightly higher in the fourth quarter.
Intel is a huge company, it sells its products worldwide, and is more than a processor company. Flash prices are dropping and the <$1000 PC market (segment zero) is developing into a significant portion of the consumer market. The economy in Japan, one of the previously important growing markets, is not good and price competition in Japan seems dormant. Southeast Asia is suffering from currency and other economic shocks.
Even given all of this, they stated that gross margins would remain flat to slightly higher. Given the seasonal kick the PC market usually gets in the third quarter from the holidays and other seasonal stimulae, I don't understand the flat comment.
I suspect that management, after being blindsided by Europe in the second quarter and surprised by flash in the third quarter, is sick of giving negative guidance during the quarter. By being conservative, they have seemingly eliminated the downside risk. They are left with a situation that would allow them, as the fourth quarter progresses and orders become more solid (they didn't mention turns environment, but that may exist as the PC makers have, according to the conference call, reduced the inventories in the channel), to make an announcement of a positive surprise.
I am not suggesting any conspiracy, only that management may be tired of giving negative guidance and is giving the most conservative realistic picture that they can, given their existing information.
Larry |
