Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: brushwud who wrote (200554)	6/6/2006 2:06:36 AM
From: Petz	Read Replies (1) \| Respond to of 275872

Here's my justification for Intel estimates: Starting point should be average analyst with estimate of $8.36B and $0.15 EPS. That EPS should correspond to Op Income of about 0.15 x 5900M shares x 1/.7 x - 175M (gains&interest). So operating income comes out to $1,089M. OK, but Handelsbanken capital said, based on April results primarily, that Intel would warn, and only post revenue of $7,900M. Handelsbanken's stuff: theinquirer.net That's a revenue drop of $460M relative to consensus. I think it will be worse than that, at $7,650M, because May was no better than April, perhaps even worse due to even more price cuts. I don't think Intel's May volume increased nearly as much as the price reductions. If it had, we would have seen more significant cuts in AMD prices. But let's first assume that Handelsbanken is right, and the shortfall is "only" $460M. (And "only" $100M below the bottom of Intel's range.) I figure that about 80% of the revenue reduction gets subtracted from Operating Income because 1) most of the revenue reduction is from price cuts rather than volume, and 2)depreciation goes down very little. So $368M gets subtracted from Operating Income (1089M) leaving $721M. I don't think Intel can quite meet the $175M interest & investment income they were hoping for, more like the $130M of Q1, so that gives $851M before taxes, $596M after taxes and eps of $0.10. OK, subtract another $250M from sales, and we're down to $711M before taxes. I figure the writeoff will be $600M, which would leave a $0.01 profit after taxes. I did the analysis a little differently when figuring an EPS entry of -0.022 for the EPS Contest. Probably figured CPU gross margin too low. Overall gross margin came to 41% (not counting writeoff, of course), which is probably too far below Intel's guidance to be reasonable even with sales $350M below their bottom guidance. Yes, I think the writeoff will be inventory and maybe writedown of assets of some stuff they know they are selling. But not layoffs (yet). Petz