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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (16514)	4/15/1998 3:12:00 PM
From: Arik T.G.	Read Replies (1) \| Respond to of 94695

RE : INTC I saw the numbers and heard the call. If I was being given the report a day before it was published, I would have bot INTC April puts like crazy. Go figure, it went UP on the news. Yes, they say the market had already incorporated the bad stuff into the stock price, and that Intel beat the consensus, but look at what they company is saying: 1. Q2 revenues would be flat to slightly down from Q1. 2. Q2 margines would be down around 2 points from 54% in Q1 3. Revenues will begin a sequential rise in Q3 4. Margins for '98 will be 52% +- 2 points. 5. In the long run gross margin would be around 50% Let's do some simple math- Q2 revenue $6B x margin 52% = operational $3.1 down from $3.2B They also said expenses in Q2 will be 3-5% higher (thats 150 Million) then Q1, so net around 180 million below Q1. Q3 and Q4 margins around 51% and 50% to make '98 margins just over 52%. Q3 revs $6.3B (5% rise from Q2) x 51%= $3.2B operational. Q4 revs $6.7B (7% rise from Q3) x 50%= $3.35B operational And I believe this to be an optimistic scenario. IMO, since the introduction of the Pentium chip, Intel is not a growth company anymore, the same way SEG and WDC aren't. Unit shipments will continue to grow, but PPU is the big problem. With the PC becoming a standard consumer good, like microwave oven (is microwave technology high tech?) and TV (is television high tech? it was in the '40s) the price of the CPU cannot cross $400 and should average $250-300. This would mean far lower margins then Intel anticipates. BWDIK? BWDIK? BWDIK? ATG