It appears you have not yet registered with our community. To register please click here...

Go Back [M] > Madshrimps > WebNews
Intel's Broken Record Intel's Broken Record
FAQ Members List Calendar Search Today's Posts Mark Forums Read

Intel's Broken Record
Thread Tools
Old 14th January 2005, 04:38   #1
Sidney's Avatar
Join Date: Mar 2004
Posts: 15,738
Sidney Freshly Registered
Default Intel's Broken Record

It's no secret that I've been a vocal critic of Intel (Nasdaq: INTC) in recent months. All for good reasons, of course. From product delays to pandering optimism, Intel fell all over itself during 2004. Ironically, that's what makes Tuesday's earnings report impressive.

Yep, I mean it. Intel did well. For the fiscal year, Intel booked $34.2 billion in sales, 13.5% higher than in 2003 and a new annual record for the company. Net income was up 33% over last year to $7.5 billion, or $1.17 per share.

The good news brightened investors' spirits, and the stock is up nearly 3% since the report. Intel's own continued optimism hasn't hurt. Late last year, the company announced a dividend increase that takes effect this month.

By now, you might be wondering why I'm not eating crow for my Halloween recommendation of shorting Intel. Well, not so fast, bucko. Take a look at the quarterly numbers. Yes, sales were a record $9.6 billion, up 10% year-over-year. But over the same period, profits were -- wait for it -- down 2.3%. And quarterly net income came in $50 million lower than during last year's fourth quarter. (Profits were flat on a per-share basis.)

What happened? For one, Intel's cost of goods skyrocketed by almost $500 million for the second quarter in a row. It's anybody's guess what actually caused the rise, but a warning from rival Advanced Micro Devices (NYSE: AMD) could provide a clue.

AMD said this week that its fourth-quarter sales would come in well below estimates because of intense pricing pressure from Intel in the NOR flash market. ("NOR" is short for "not or," a Boolean logic operator and one of the two types of flash memory, the other being "NAND," for "not and.") As if in confirmation, Intel said in its earnings report that it had regained market leadership in NOR flash because of "continued strong growth." But it's not that simple, folks. Though year-over-year flash sales were up more than 60%, Intel's flash revenue sequentially rose less than 1%.

Now look at the gross profit numbers: Year-over-year, revenue rose by $857 million, while the cost of producing those sales increased by $1.04 billion. Look at that again, because it's hugely important. For every dollar of new sales in 2004, Intel spent $1.21.

No sane person would say that Intel's operations experts have gone missing. This company is too good and too well-run for this apparent inefficiency to be an accident. So what the heck happened? AMD happened, that's what. Take the AMD Opteron 32/64-bit combo chip, for example, which has scored a flood of design wins and has led to rumors of a deal with Dell (Nasdaq: DELL). Such successes by AMD have put rival Intel in an odd place: It has forced new investments, and more spending.

Intel ought to be applauded for a record-breaking year. But the chipmaker paid a high price to do so well. And if it continues, 2005 won't be any better than 2004. In fact, it could be a whole lot worse.

Opteron 165 (2) @2.85 1.42 vcore AMD Stock HSF + Chill Vent II
Sidney is offline   Reply With Quote

Similar Threads
Thread Thread Starter Forum Replies Last Post
GIGABYTE Refreshes 3DMark Vantage World Record in "OC Guru Is You" jmke WebNews 0 16th May 2010 15:09
SuperPi 1M record broken today in Live OC Session in Spain jmke WebNews 0 3rd August 2008 14:27
Corsair Dominator DDR3 Memory Sets New World Record jmke WebNews 0 1st August 2008 13:16
Corsair Dominator Hits 2462MHz - Sets Memory Frequency World Record jmke WebNews 4 21st May 2008 17:19
New Quantum Force motherboard breaks 3DMark record in early testing jmke WebNews 5 20th December 2007 22:20
Intel's 65nm Processors Overclocking Preview: 4.5Ghz no problem jmke WebNews 2 25th October 2005 21:50
Intel Posts Record Second-Quarter Revenue of $9.2 Billion Sidney WebNews 1 19th July 2005 21:40
Microsoft Reports Record Revenue and Earnings Sidney WebNews 0 28th January 2005 00:05
Internet2 Speed Record Broken jmke WebNews 13 3rd September 2004 23:08

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are Off

All times are GMT +1. The time now is 23:44.

Powered by vBulletin® - Copyright ©2000 - 2023, Jelsoft Enterprises Ltd.
Content Relevant URLs by vBSEO