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

To: Jay who wrote (42164)	12/13/1997 9:54:00 AM
From: gnuman	Read Replies (1) \| Respond to of 186894

Intel Q3 Year to Year data, Q4 suppositions The following was extracted from Lehman Bros report of Intel Q3'96/Q3'97 performance. I billion increase in revenues entirely due to sale of PII. ($5124 to $6155 Mil Revenues). PII accounted for 21% of CPU revenues. Non CPU revenues, (EPROM/FLASH, Systems, 487SX/Overdrive and OTHER), were flat year to year. CGS, R&D and SGA were flat as a % of sales Intel guidance for Q4 is sales up slightly, GM flat to up. Intel projects Q4 expenses up 10 -15%. (Up $125 - $190 Mil, 2 -3% of revenues). Q4 suppositions. If PII revenues double to $2000 Mil, (note, this requires greater than 2X unit volume based on ASP declines), Pentium and P Pro sales need to be at least $2800 Mil, (74% of Q3 sales of $3750 Mil). PII sales would then equal 41% of CPU revenues, up from 21% in Q3. Intel CPU unit sales in Q3 were estimated as 20 Mil. I expect this to be up in Q4, driven by increased penetration in the home PC market. The issue is how much of this increase is in Sub-zero machines. IDC estimates an increase of 8% in the home PC segment in `97, (about 8 mil units), with about 5 Mil of these being sub-zeros. I figure about half of these units will be sold in Q4. There is also the specter that many of the current owners in this segment purchased second and third machines, and these don't show up in the penetration numbers. The question is how many of these machines were in the sub-zero or Pentium category? Considering the ASP decline in the Pentium and Pent Pro, unit sales of these products may have to be constant or up in order to hit $2800 Mil in revenues for these products. How much of a drag will this be on margins? So in my estimate, unit sales of PII needs to at least double while Pentium unit sales needs to be at least flat if Intel is to generate flat revenues Q3/Q4. If this happens, I think the PII sales will make up for the margin hit of Pentium. (Note Pentium Pro accounted for about 15% of Q3 CPU revenues, Pentium 64%). I think it's also important to remember that while the numbers show 21% of Q3 CPU sales are PII, this represents around 15% of unit volume. I think it will be quite a while before PII surpases 50% of CPU shipments. I previously asked a number of questions for inputs on future PC trends. I'm particularly interested in how this thread see's CPU product mix over the next year or so. If we can accurately figure that out we may be able to make some intelligent assumptions about revenue and margins. Note, these are only my opinions and interpretations, and do not necessarily represent facts, only my conjecture