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Wednesday, October 15, 2008

Intel 3Q:2008 results

Revenues came in relatively close to consensus at 10.2 billion – the street was ~10.3 billion. Gross margins were slightly better at 59%. They guided to 10.1 - 10.9 billion for Q4, which puts the midpoint at 10.5 billion – the street is at ~10.77 billion. Gross margin guidance is also in line at 59% +/- 2%. Atom processors, the ones that go in those mini-notebooks that are starting to crop up everywhere, sold very well. Selling prices on those are lower than the company average and will skew the mix lower going forward as they are the fastest growing product in the line presently.

Sequential revenue guidance for the fourth quarter is the lowest it's been in many years – typically Intel expects a big sales bump going into the holidays. Not this year, huh. The company said they're cautious about the economy. Join the club.

The stock is up a little. I have to say, the outlook was better than I feared it would be based on the present abnormally slow supply chain build – maybe others like myself were expecting worse. I expect the pop is temporary. I have said before that I think Intel is a low growth company and the premium multiple it receives is somewhat unjustified. I think fair value in the stock is $12 - $20. We are in the mid-range of that band (though we are actually in it which is a refreshing change) and the company is lobbing out revenue forecasts that may still be too aggressive. I expect as the economy continues to slow and multiple reality sets in the stock will slide lower.

1 comment:

Bogglor said...

Though all of this is true, the fact that this is a stock that many will choose to hide in helps it somewhat. You're not going to get killed owning it going forward, and you just might show a decent gain if you hold the position longer term.

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