The Worst Kept Secret on Wall Street (Intel’s “Surprise”)
That’s what Fred Hickey’s High Tech Strategist called the prevalent belief that Intel would report better than expected revenue this afternoon when he issued his October newsletter nearly two weeks ago. With the cat out of the bag, apparently it was unavailable to get the tongue of Intel’s Asia-Pacific region general manager at a press briefing yesterday. Bloomberg.com reports:
Intel Corp., the world’s largest semiconductor maker, said fourth-quarter sales will be higher than expected on market share gained from Advanced Micro Devices Inc. and the fading of concerns caused by the release of Microsoft Corp.’s new operating system.The fourth quarter “will be better than was expected in the first half,” John Antone, Intel’s general manager for Asia- Pacific said at a press briefing in Taipei. Executives at Intel’s developer forum in Taiwan declined to give details before its earnings announcement in the U.S. tomorrow.
The reason for the high expectations that revenues would be better than expected (or at least guided toward) was the company’s aggressive efforts to win back market share previously lost to rival AMD. Again according to Bloomberg:
Intel’s share of the personal-computer processor market fell to 72.9 percent in the second quarter from 82.2 percent a year earlier, according to Cave Creek, Arizona-based Mercury Research.
The company cut processor prices as much as 60 percent in July to win back market share lost to Sunnyvale, California-based Advanced Micro, which released higher-performance chips earlier. Intel’s second quarter sales fell 13 percent to $8 billion on the price cuts, and its profit fell 57 percent to $885 million.
The problem is, everybody knew that Intel would beat on the top line and why they would beat on the top line, so it isn’t really news. What investors will be looking for in this afternoon’s official release is:
- How did the aggressive pricing affect margins?
- How does it affect next quarter’s guidance?
Anyone?
Disclosure: William Trent has a long position in SMH.
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