INTC stalls, part III
Parting Shots
Don't Blame Asia: Intel's weakness was not an Asian problem -- Asia/Pacific was the only
region to post sequential growth in Q1 as Taiwanese manufacturers boosted chip purchases for
re-export. Some may see this is as good news, but we find it worrisome that revenue weakness is
happening in North America and Europe, where the PC market should be booming.
With A Name Like This: It is telling that Intel's big product announcement scheduled for
Wednesday is the new Celeron chip. Think about it -- Celeron is a step back in both technology and
price from the Pentium II. Stepping up processing power is how Intel soared in the past decade --
this step back is a sign of the times.
Must Have Bandwidth: We've said it before and we'll say it again: paradigm shift from processor
speed to bandwidth. Question: you've got a Pentium 200 and a 33.6 modem -- what upgrade would
you prefer, a Pentium II 300 or a T1 connection. We'll take the T1, thanks.
Compaq Sees Tough Q2: Compaq's earnings didn't shed much light on Intel -- CPQ said that Q2
would be "a period of adjustment." Both INTC and CPQ are hoping that the second half will bring
improved profits, but hoping is the key word; the near-term outlook is still bleak.
Whither Corporate Profits: On a marginally related note, it looks like Intel and Compaq are not the
only companies suffering year/year earnings declines. That 40 P/E growth stock Coke just reported
Q1 EPS of $0.34, down from $0.39 year-ago. And the Congressional Budget Office reports that Q1
withheld corporate tax receipts are off 8% from Q1 1997. Hmmm, now why would corporations be
paying less tax?
[Compaq (CPQ) makes
a penny in the first quarter and says it won't make any money in the second...stock rises 1 1/2
on back of similar gain yesterday...meanwhile, Intel (INTC) has third straight quarter of year
over year decline in profits, and serious slowdown in revenue growth, yet is up strongly (see
Stock Brief for more analysis)...but this is a bull market and the momentum is very
strong.] |
