Frank:
(Margin can hurt - I know!)
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Any way as I said yesterday I smell a rat with the INTC announcement. They are hurting with the sub 1000 paradigm shift - they just do not want to admit it. Dell and others saying PC unit demand is strong. Saw this in Business Week Online that confirms that January was strong and all is definitely not lost:
Intel blamed the shortfall on a slowdown in orders from computer makers. That's surprising, too, given that researcher Computer Intelligence just reported that January PC unit sales rose 35% from the same period last year -- indicating that customer demand is still strong. A more likely culprit is the rapidly-eroding average price of PCs, which fell more than 10% between December and January alone, Computer Intelligence says. Lower-price PCs use cheaper Intel processors, so even if volumes are growing the chipmaker could be taking in less revenue.
With its high fixed costs, Intel is vulnerable to sudden price drops, analysts say. And indeed, the company also warned today that profit margins are slipping. Instead of projected 56% to 59% gross margins for the first quarter, Intel now says it's likely to see 53%. "The sub-$1,000 price category is having a much bigger impact than we realize," Klesken says.
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Now if everyone thought like I did after an initial pounding we may well recover. Besides it'll get some rationality back into the markets - I just hope they don't get too rational!
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As to particular semis the commodity ones will get hammered - that means AMD TXN etc.
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Shane. |
