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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Grandpa Joe who wrote (85550)	7/13/1999 9:48:00 PM
From: Fred Fahmy	Read Replies (8) \| Respond to of 186894

<It is shaping up to be a weak year for Intel.> It is shaping up to be record year for Intel revenue and earnings. <The company reported Q2 EPS of $0.51, missing the First Call estimate by two cents.> The company reported record Q2 EPS of $0.51, exceeding last years figure by a staggering 55%. <The revenue number was the problem for Intel this quarter.> Q2 revenue was a record $6.7 billion and up 14% vs. last year. <The earnings miss would have been much worse had it not been for the fact that gross margins held at 59% instead of falling, as had been expected.> Record earnings were fueled by higher then expected margins which remained solid. <Cost improvements and manufacturing efficiencies offset the lower average selling prices that were the result of a shift to Celeron processors.> Cost improvements and manufacturing efficiencies offset the lower average selling prices that were the result of a shift to Celeron processors. < The future looks much like the recent past for Intel. Q3 revenues are expected to rise only slightly from Q2, which is not that impressive given a seasonal tendency for revenues to rise better than 7% in Q3.> The future looks much like the recent past for Intel. Q3 revenues are expected to be another record. This will be the 5th consecutive record quarterly revenue number. <Cost cutting will help keep margins high, however, which will in turn help to support earnings. But based on today's guidance, higher margins will probably not be enough to prevent Q3 earnings from missing current analyst estimates.> Cost cutting will help keep margins high which will in turn help generate record Q3 earnings. <The First Call estimate for Q3 was $0.58 prior to today's release, but Intel's guidance points to a number closer to $0.52.> Many analysts had been worrying about the second half of 1999, However, Intel's guidance points to record Q3, Q4, and full year revenue and earnings. In addition, margins are expected to continue improving toward the high end of their historic range. <The problems for Intel are clear -- the market is moving rapidly to its lower price Celeron processor. The demand for ever higher processor speeds is not there, and the growth segment of the market is shifting to the low end.> The reasons for Intel's success are clear. The internet together with Celeron processors are creating huge incremental demand for PC's. These PC's in turn fuel the need for ever expanding infrastructure which is becoming largely dependent on high end Intel chips. In addition, Asia is continuing to recover and businesses in other geographies such as Europe are playing catch up to remain competitive in a global technology economy. Finally, and perhaps most significant, is the rapid exponential growth of e-commerce. E-commerce will shape the economy more so than anything since the industrial revolution. Intel will be at the focal point of this growth. <We have been arguing for more than a year that processor speed is the old paradigm and that Intel will struggle to remain a growth company in that environment.> We have been arguing for more than a year that the need for more processor speed will continue to accelerate as bandwidth increases and as voice and multimedia applications increase. In addition, future Intel processors will supplement or replace applications previously reserved for mini computers (e.g. AS/400's) and even mainframe computers only. <Today's earnings report gives us more confidence that this view is correct.> Today's record earnings report gives us more confidence that this view is correct. <INTC shares initially dropped 2 points in after hours trading, but subsequently rebounded to near unchanged. > Any near term drop in INTC share price should be used as a buying opportunity for those with an investment horizon which spans beyond next week. FF

To: Grandpa Joe who wrote (85550)	7/14/1999 1:15:00 AM
From: Sudeep Bhoja	Read Replies (5) \| Respond to of 186894

Hello, I listened to the conference call today and my overall opinion is neutral. I am long this stock but less than enthusiastic about the Q2 results. As you all know revenues at $6.7B & EPS @0.51 is below estimates. My notes from the conf call, 1) They took over market share in the Celeron segment. 2) Increased margins to 59% & guidance for the rest of the year increased to 60% from 57%. Superb execution with falling ASP's. 3) Forecast strong second half but said Q3 will be only slightly higher. I dont understand this given that Q3 is stronger than Q2. 4) PIII tripled in volume in current Q and will exceed PII next Q. I think they also mentioned that it will exceed Celeron. Thats really good news. 5) 4 way XEON systems will be out in Q3 after being delayed for 1.5 Quarters. Sloppy execution here. 6) Merced has taped out. Will introduce the 820 chipset in the 3Q that supports RDRAM or SDRAM. 7) Level One will dilute future EPS by 3 cents. Dialogic by 1 cent. Too bad Intel is forced to get into these lower margin businesses. In conclusion Intel's market is not what it used to be. However, the company's management is superb and is able to deliver in rather tough times. Any comments? -Sudeep