Andy,
What makes you optimistic about INTC? CPQ's warning seems like bad news for
INTC.
Boy, it seems like I get to type this a lot lately, on several threads I participate in. Anyhow, the reasons I think Intel will report good earnings on Tuesday:
1. The Compaq thing is being called a company specific problem by some, like Ashok Kumar, who's been pretty good calling the PC sector, even better calling Intel (+) and AMD (-). Re company specific on CPQ, OTOH, Dell was bullish about everything in their analysts' meeting last week. CPQ, IMO, is not well managed. Dell is. Merrill Lynch's new guy and Tom Kurlak replacement, Joe Osha also thinks Intel will be OK, and he does thorough research, by first appearances. That's something Kurlak didn't appear to be doing in his last year or so with ML (if ever).
2. All the hoopla that's been flying around about cheap PCs and chip price wars might kill AMD, but Intel, with their high priced Xeon chips (no competition) is maintaining their overall ASPs at around $200. LSI, e.g., would kill for ASPs of even a high fraction of that (as would AMD). At this ASP, and their cost management (see 3), Intel's margins should stay at a very high level for the industry.
3. Intel embarked on serious cost cutting and cost watching about a year ago. There is none better than Intel, and Craig Barrett, CEO, at this in the industry. One example is Intel's putting off copper until 0.13 micron line widths because it doesn't buy measurable improvement in speed at 0.18. Also, they are not taking the lead on 300 mm, did it last time, they'll share in the ground breaking this time. And, I read that Intel thinks they can use 70 - 80% of their existing processing equipment even when going to 0.18. Lastly, Intel is hiring very selectively rather than going overboard with new hires.
That's enough, let's see if I'm right on Tuesday, about 1:20 PDT.
Tony |
