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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Paul Engel who wrote (64814)	7/11/1999 11:39:00 PM
From: Cirruslvr	Read Replies (4) \| Respond to of 1579779

Intel Seen Reporting Higher 2nd-Qtr Results Amid Cost Cutting This is an interesting article. To spoil your fun of reading it on your own, Ashok Kumar (the eerily accurate (except w/AMD's Q4 results) analyst) says ASPs will drop $8 to $210 and shipments dropped by 400K to 24.9M. Also, Celerons are expected to be 38% of Intel's total production, or 3-5% more than expected and 11% more than last Q. BUT Intel also employed lots of cost cutting methods such that they are "Seen Reporting Higher 2nd-Qtr Results". And the PIII's sales are also increasing. I think this presents an interesting dilemma. Will the market focus on Intel's profits, which are now expected to be good, or on ASPs? The reason Intel's stock went down this Q was because some people expected fewer profits and lower ASPs. But now that the more important of the two is expected to be fine, we will have to wait and see if the market will reward Intel. Of course, another important factor in what will happen is what Intel says about the rest of the year. What they say about shippments won't matter because they always go up, but if they project higher than expected ASPs (or gross margin because that is how they talk) they should be perfectly fine. Basically, it is Lower chip sales and ASPs VS. Increased cost cutting VS. Last half '99 projections. (In case anyone is wondering why I care so much about Intel, it is because if Intel projects something non-optimistic, the Nasdaq may want to give back all the gains from the past two weeks, or in more truthful words ;), our other stocks will go down.) _____________________________________________________________________ Intel Seen Reporting Higher 2nd-Qtr Results Amid Cost Cutting Santa Clara, California, July 10 (Bloomberg) -- Intel Corp., the world's largest computer-chip maker, is expected to report higher second-quarter earnings Tuesday as cost-cutting helped it compensate for price cuts on its already low-priced processors. Profit at the Santa Clara, California-based company is forecast to rise to 53 cents a share, the average estimate of analysts surveyed by First Call Corp. A year ago, Intel had earnings of $1.17 billion, or 33 cents. Sales are expected to rise about 18 percent to $7 billion from $5.9 billion. Intel, caught off guard last year by rising demand for low- priced personal computers, sped up product introductions and slashed prices on its low-cost chips to compete with rival Advanced Micro Devices Inc. The company improved manufacturing and used cheaper packaging to help mitigate the effect of the price cuts on its profit. ''This is a technology and manufacturing company. Their production costs are coming down and profits will go up,'' said Graham Tanaka of Tanaka Capital Management, which has $140 million under management and owns shares of Intel. Several analysts expressed concern during the quarter that Intel was being too aggressive on slashing prices to win back market share and that the increased sales of its low-end Celeron chip might take sales from its more expensive chips and hamper earnings. Intel's stock ended the quarter almost exactly where it was at the beginning of April, compared with a rise of more than 12 percent in the Standard & Poor's Electronic Semiconductor Index. The company's shares rose 1/2 to 66 1/4 yesterday. New Products, Low Prices Intel lost sales to rivals last year, when its market share fell to 76 percent from 86 percent in 1997. It's regained share in recent months by slashing prices and offering deep discounts to some small PC makers. The average selling price for all Intel chips fell to $210 from $218 in the first quarter, according to analyst Ashok Kumar of U.S. Bancorp Piper Jaffray. At the same time, Intel shipped fewer chips during the second quarter -- about 24.9 million compared with 25.3 million in the first, Kumar said. Celeron chips, which are designed to power computers costing less than $1,000, will account for about 38 percent of Intel's total chips sold during the period, compared with an earlier forecast of 33 percent to 35 percent and first-quarter levels of 27 percent, said analyst Charlie Glavin of CS First Boston. He expects $6.9 billion in revenue and profit of 53 cents. Intel is shipping the Celeron processors in cheaper packaging and constantly works to shrink the actual size of the chip, which effectively reduces cost by allowing more chips to be etched on each silicon wafer. ''They've been able to mitigate a lot of the product-mix shift because of production cost savings,'' Glavin said. ''People have severely under-appreciated the efforts by (Chief Financial Officer) Andy Bryant on cost savings,'' he said. Intel also is benefiting from rising sales of its Pentium III chips, which are its most expensive products and are used in powerful workstations and servers. Demand Picking Up ''There were lots of stops and starts in the quarter, but on balance (results) will be close to where Intel thought they'd be at the beginning of the quarter,'' said analyst Steve Dube of Wasserstein Perella Securities. Intel will report second-quarter results Tuesday after the close of U.S. markets. The company's gross margin, or the percentage of sales remaining after costs of production are subtracted, is expected to be about 59 percent, unchanged from the first quarter. In the first quarter, Intel's sales were lower than expected, though profit exceeded forecasts, as lackluster PC demand and falling prices crimped revenue. Analysts said the slow PC and chip demand has started to turn around and will get better in the second half with the back-to-school and holiday sales seasons. quote.bloomberg.com _____________________________________________________________________