Hi Harry,
My take on the recent burst in revenue is that INTC's business has been shifting. A year ago, I think they sold a lot more motherboards (including memory) and a lot less actual chips. Over the last year, INTC has reduced the sales of motherboards (now sold without RAM, and a lot less of them), and increased the number of chips. They've done this slowly (and not mentioned the sales mix in the releases), thus while revenue appears to be flat, the sales of processors could have been exploding;
1 motherboard w Pentium and RAM = $2000 cost to INTC $1500
3 Pentiums = $2100 cost to INTC $500
In that case (numbers are wrong), revenue has increased 5%, but margin has gone up from 25% to 75% and earnings with it.
So, I think that demand is certainly increasing, but it isn't as sudden as the numbers would have you believe. Why were all the insiders holding? Because they had a feeling that the numbers were shifting dramatically. Btw, I think that the motherboard business probably hit the bottom in Q3, so the earnings couldn't be 'hidden' any more...
Just my thoughts,
Richard |
