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

To: Saturn V who wrote (178659)	7/15/2004 1:20:53 PM
From: Elmer Phud	Read Replies (2) \| Respond to of 186894

Saturn The inventory increase was due to higher yields, and not due to a lack of demand. So the higher yield will eventually translate to higher profits downstream. The higher inventory is clearly a problem if it is due to a reduction in customer demand. But such is clearly not the case. I think the fear is that the higher inventories are really the result of less than anticipated binsplit, where Intel had to start more wafers to get enough higherspeed parts, thus being stuck with too many slow ones. I'm not saying this is true but I think that's the concern.

To: Saturn V who wrote (178659)	7/16/2004 4:48:08 PM
From: GVTucker	Read Replies (2) \| Respond to of 186894

Saturn, RE: The response to Intel's Earnings is irrational. The inventory increase was due to higher yields, and not due to a lack of demand. So the higher yield will eventually translate to higher profits downstream. The higher inventory is clearly a problem if it is due to a reduction in customer demand. But such is clearly not the case. Then you misunderstand the Street's reaction. The inventory hasn't caused a demand worry. It has caused a margin worry. Most every analyst who upgraded this stock last year did so because they thought that margins had risen to a new level. That is apparently not the case. A lot of that increased margin has translated into inventory. Note that management guided margins lower for the rest of the year. Also note that the analysts have adjusted revenue expectations upward, showing that they believe management's demand expectation. Granted, I think that the Street has indeed probably overreacted to the Intel earnings report, yes. But I don't think that the reaction has been irrational.