Intel Corporation (NASDAQ: INTC) reported results which continue to reflect the impact of a stronger competitor in Advanced Micro Devices, Inc (NASDAQ: AMD), which was seen primarily in the gross margin line.However, despite having a viable competitor, Intel results were reasonably good. Revenue came in at the top end of analyst estimates and guidance provided by the company for the 4Q 2006. In addition, guidance for 1Q 2007 also appeared OK.
Historically, Intel has traded on gross margins, which have been in decline for the past year. There is some evidence to suggest that 1Q 2007 could be the bottom for this metric.
What could drive gross margins higher is the huge demand increase for processors as notebooks continue to go to a dual processor and desktops go to a quad processor design. This means demand for processors will continue to grow, but more importantly, the manufacturing costs for processors are dropping fast.
I would use any price weakness to start buying Intel. It appears from both Intel and AMD chipset designs that Windows Vista operating system is going to require a lot of processing power. This could drive solid second half of 2007 results for both companies.
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Reader Comments (Page 1 of 1)
1-17-2007 @ 12:06PM
Jorge M said...
Your article rings true. What perplexes me is: They clearly beat analyst expectations, why then has the stock plummeted ? I firmly believe this is a ploy to make a huge amount of money before options expiry on Friday.
1-17-2007 @ 12:07PM
Edward T Asato said...
Why does Intel gets a pass on their poor earning report? This Company must overhaul their business practice. AMD who is a much smaller Company is a much better buy.