Intel's Profit Drops 57%

[drcroubie]

Hey, guys, our current processor lineup absolutely sucks balls. It's slow as all hell, and too hot. In 6 months, we've got something coming up that will completely blow everything from us and the competition out of the water. It's the biggest change since the 80386 doubled the amount of processing bits from the 80286.
So don't buy anything for the next 6 months, wait until July when the best thing since sliced bread will be out.
If you buy a system now, we can't guarantee that the new cpus will work in it. In fact, they most likely won't. But if you really, really like the old stuff, wait until July too, because we'll be throwing out our old cpus dirt cheap. We might even be giving them away with Happy Meals, because they're so crap.

So whatever you do, don't buy anything until July, not only from the competition, but from us too.


http://www.tgdaily.com/2006/07/19/intel_q2_2006/
geez, is it any wonder?

 

[dt]

Hey, guys, our current processor lineup absolutely sucks balls. It's slow as all hell, and too hot. In 6 months, we've got something coming up that will completely blow everything from us and the competition out of the water. It's the biggest change since the 80386 doubled the amount of processing bits from the 80286.
So don't buy anything for the next 6 months, wait until July when the best thing since sliced bread will be out.
If you buy a system now, we can't guarantee that the new cpus will work in it. In fact, they most likely won't. But if you really, really like the old stuff, wait until July too, because we'll be throwing out our old cpus dirt cheap. We might even be giving them away with Happy Meals, because they're so crap.

So whatever you do, don't buy anything until July, not only from the competition, but from us too.


http://www.tgdaily.com/2006/07/19/intel_q2_2006/
geez, is it any wonder?

eh i could care less if there profits drop. if they do they make us happy by bringing processors out.

as for that statement you said about dont buy anything until july... umm it has been july since 20 days ago..

 

[BaronMatrix]

Can we all smell the money burning?

 

[spud]

Can we all smell the money burning?

Transition always costs money, we all knew they would have lower than expected revenue for this quarter so what’s the big surprise that its official, furthermore they are still yet profitable.

 

[BaronMatrix]

Can we all smell the money burning?

Transition always costs money, we all knew they would have lower than expected revenue for this quarter so what’s the big surprise that its official, furthermore they are still yet profitable.

Thx for the spin, doctor. I told you this would happen. Q3 will be just the same.

 

[spud]

Can we all smell the money burning?

Transition always costs money, we all knew they would have lower than expected revenue for this quarter so what’s the big surprise that its official, furthermore they are still yet profitable.

Thx for the spin, doctor. I told you this would happen. Q3 will be just the same.

Spin doctor we all knew it was coming or do you forget those discussions?

You also told us K8L would be out at the end of 2006 and Core 2 benchmarks were FUD what’s your point?

Q3 not likely I am afraid, the 900 pound gorilla is going to open up.

 

[BaronMatrix]

Spin doctor we all knew it was coming or do you forget those discussions?

You also told us K8L would be out at the end of 2006 and Core 2 benchmarks were FUD what’s your point?

Q3 not likely I am afraid, the 900 pound gorilla is going to open up.

I think you're confusing me with someone else. I never said either of those things.

Though I can say that Intel's projections say they won't be 50% Core 2 until NEXT YEAR.

 

[Caboose-1]

Spin doctor we all knew it was coming or do you forget those discussions?

You also told us K8L would be out at the end of 2006 and Core 2 benchmarks were FUD what’s your point?

Q3 not likely I am afraid, the 900 pound gorilla is going to open up.

I never said either of those things.LMAO! :lol:

 

[gr8mikey]

Can we all smell the money burning?

If you think thats bad, wait until you see AMD's profit shortfall tomorrow. If they show the FAB 36 depreciation this quarter like they should, they may very well be back in the red.

 

[BaronMatrix]

Can we all smell the money burning?

If you think thats bad, wait until you see AMD's profit shortfall tomorrow. If they show the FAB 36 depreciation this quarter like they should, they may very well be back in the red.


AMD has already posted their Q2 advice. Up 52% from Q205 down 9% from Q1. Spending isn't a factor unless it was unreported. Wall St knows how much Fabs cost.

 

[gr8mikey]

Can we all smell the money burning?

If you think thats bad, wait until you see AMD's profit shortfall tomorrow. If they show the FAB 36 depreciation this quarter like they should, they may very well be back in the red.


AMD has already posted their Q2 advice. Up 52% from Q205 down 9% from Q1. Spending isn't a factor unless it was unreported. Wall St knows how much Fabs cost.

Yes, they guided down the revenue number by 9%, but you wont know what that will do to their profit number until tomorrow

 

[DrBlofeld]

Can we all smell the money burning?

Transition always costs money, we all knew they would have lower than expected revenue for this quarter so what’s the big surprise that its official, furthermore they are still yet profitable.

Thx for the spin, doctor. I told you this would happen. Q3 will be just the same.

BM proves the Infinite Monkey Theorem

 

[K8MAN]

It is shocking that it fell that much and definatly shows why they've made so many cuts recently. AMD's 65nm delay was Intel's saving grace this year IMO. Core 2 came out just in time.

 

[bixplus]

I told you this would happen. Q3 will be just the same.

lol...I'm going to save this post of yours and will repost it after the Q3 results. Care to place a wager now?

How about this. If you're right, I'll leave THG and never post here again. However, if you're wrong, you leave and never post here again. Deal?

Time to put up, or shut up.

 

[drcroubie]

The Colbert Report provided an analysis of how many monkeys it would take for various works. This was in response to comments made in the news on monkeys typing out the Bible or the Koran. According to Colbert, one million monkeys typing for eternity would produce Shakespere, ten thousand (drinking) monkeys typing for ten thousand years would produce Hemingway, and ten monkeys typing for three days would produce Dan Brown.

sorry to hijack my own thread, but that's just funny...

 

[xombie2000]

Ok so this means stock will be down, a good thing if you buy and make some money. Certainly it stands to go up with so many new products costing so much less and out performing their competition.

 

[ltcommander_data]

I'm not a stock analyst, but if I were to invest in Intel I would be doing it for the long term. In such a case, it's important to put things in that perspective.

http://www.intel.com/pressroom/archive/releases/20050719corp.htm

The reason why the results this year appear so low is, because last year was a record year for Intel. According to them, last year's Q2 revenue was up 15 percent over Q2 2004, and net income up 16 percent.

http://www.intel.com/pressroom/archive/releases/20040713corp.htm

Looking back at 2004, we see the Q2 revenue was $8.05 billion, which puts this year's $8 billion revenue in line. The difference is that while the revenue is the same, the net income is down from $1.8 billion in Q2 2004 to $885 million Q2 2006.

Now obviously, it'd be nice for last year's result to be the beginning of a trend, but from this year's result, the 2005 year was obviously an anomaly. Still what does that mean for Intel in the long term?

First, with revenue inline with 2004 it's clear that Intel is still selling well, although not as well as in 2005. Second, it is critical to note that while they are selling well, they aren't making as much profit. This we can imply as being the result of all those pre-Conroe price cuts. It's wrong to assume that Pentium Ds didn't sell, they did. The price cuts ensured that. It also ensured small margins though, which is what we are now seeing.

However, in the long term things are cautious, but are looking up. With the arrival of Conroe, Intel now has a full product line. What I mean is that instead of being bottom heavy ($100-$300), there are decent parts that are worth the higher prices, notably the E6700 and X6800. This means that sales will see shifts toward higher margin parts which will help improve profits even if revenue is maintained. This is even more true in the higher margin server market where for the first time in a while Intel appears to have a credible product line. (This is why they worked overtime in launching Woodcrest in June, Montecito in July, and Tulsa in August).

The question goes back to the old Netburst chips of course. However, if the revenues of Q2 are an indication, if you price then low enough people will buy. With additional price cuts coming, sales will no doubt continue to be sustained. The caveat is of course the X2 3800+ and X2 3600+, but the marketing people have to earn their keep somehow. Now, sales of Netburst parts at even lower prices may look good on revenue, but won't do anything for profits. This is of course where strength of server sales and sustaining the mobile market is critical. High-end desktop is also important which is why Intel long ago announced that 3.2GHz Extreme Editions are coming in Q4 and Kentsfield in Q1 2007. Something new every quarter.

All in all, over the long term things aren't particularly grim. How Sharikou can say Intel will be bankrupt in 5 quarters when they're still pulling in net income is beyond me. Still, things certainly aren't all rosy for Intel, which is why I'm not buying. They'll definitely have to ensure penetration of high margin areas to ensure they don't just have sales, but also profits.

For reference the 2003 Q2 results are here:

http://www.intel.com/pressroom/archive/releases/20030715corp_a.htm

Revenue of $6.8 billion and net income of $896 million. Definitely indicates a peak in 2005 and kind of flat overall.

 

[the_vorlon]

$885 million in quarterly profit...

Yikes! - that's barely $3.5 billion a year on an annual basis - mind April-June is always the worst quarter.

Can Intel survive many more quarters of bleeding money like that?

How long can a firm survive making only $3.5 billion a year?

Intel damn well better have a really good product in the wings to rebuild profitability soon, or they may be in real trouble.

AMD's profits should be much better than that, and I am sure they will be, and AMD's balance sheet is in much better shape, reflecting their ongoing profitability.

 

[BaronMatrix]

I told you this would happen. Q3 will be just the same.

lol...I'm going to save this post of yours and will repost it after the Q3 results. Care to place a wager now?

How about this. If you're right, I'll leave THG and never post here again. However, if you're wrong, you leave and never post here again. Deal?

Time to put up, or shut up.

I'll bet you $10. Now what we are talking about is year-on-year. With Core 2 ramping it may push up prices and leave a glut of P4s. If OEMs have a "can't sell it" deal, it maybe bad. If P4 does liquidate in line with Intel's 50% number by Q1, they will have an ASP that will HeatBurst every house in No America at $40 Dell.

Sempron has been AMDs biggest retail seller (check out Best Buy) so they will still gain share while saving money on 1MB retail chips.

X2 3600+ will be here soon and will start to replace Sempron with the big DualCore, double speed DDR sign for pennies more.

Single core has been cancelled. This will limit the amount of masks needed and separate runs necessary. Fab36 has good capacity - I believe the number was about 2,000 wafers per month at 65nm - currently. It is set to ramp to 50% 65nm Q107.

WIth ALL X2 going to 65nm cost-savings for the next few quarters will make up alot of ground in the midrange market. With Dell supposedly set to announce a larger deal after quarterly it will mean a lot of 65nm can go to them with the business platform. I for one will be glad to get rid of the OptiCraps I have to dev with. Whether it's AM2 or Core 2.

Anyway, AMD seems pretty well prepared to make some money this year.

 

[ltcommander_data]

Going 65nm is great, but with chips launching in December, we're likely looking at January for full availabiliy, which means it's major effect will by on Q1 2007 revenue for AMD.

In the meantime, Intel's chips are very competitive price/performance wise.

http://www.xbitlabs.com/articles/cpu/display/core2duo-shootout_13.html

Note, this include AMD's recent price cuts and Intel is still ahead on nearly all counts. In terms of Netburst, the price drop of the X2 3800+ makes it a great value, but it doesn't shut out the 945D which is slightly more expensive and slightly more expensive. Still a great value in comparison. This also doesn't include the 805D which is sub-$100 and should undercut the X2 3600+. If anything will transition people away from Sempron and Celeron D to dual cores, it'll more likely be the 805D than the X2 3600+ unless AMD is pricing it really low in the $110s or below.

 

[bixplus]

I'll bet you $10.

No way. I take my bets seriously. My offer still stands, you win I leave, I win you leave.

Now what we are talking about is year-on-year.

If this is going to work, you have to be more specific than that. Come on, you're the analyst, it shouldn't be too hard to lay some concrete specs.

 

[DrBlofeld]

I'll bet you $10.

No way. I take my bets seriously. My offer still stands, you win I leave, I win you leave.

Now what we are talking about is year-on-year.

If this is going to work, you have to be more specific than that. Come on, you're the analyst, it shouldn't be too hard to lay some concrete specs.

Those are serious words. The baron's weak response shows his lack of trust in his own comments.

 

[BaronMatrix]

Going 65nm is great, but with chips launching in December, we're likely looking at January for full availabiliy, which means it's major effect will by on Q1 2007 revenue for AMD.

In the meantime, Intel's chips are very competitive price/performance wise.

http://www.xbitlabs.com/articles/cpu/display/core2duo-shootout_13.html

Note, this include AMD's recent price cuts and Intel is still ahead on nearly all counts. In terms of Netburst, the price drop of the X2 3800+ makes it a great value, but it doesn't shut out the 945D which is slightly more expensive and slightly more expensive. Still a great value in comparison. This also doesn't include the 805D which is sub-$100 and should undercut the X2 3600+. If anything will transition people away from Sempron and Celeron D to dual cores, it'll more likely be the 805D than the X2 3600+ unless AMD is pricing it really low in the $110s or below.

Dell makes most of their money through corporate sales, which is why AMD needed to snag them for corporate growth. They can get rid of AM2 like they were never there if availabilty is there. I rememebr the runor that AMD was hlding back a surplus of chips for Dell,though it was the Inq.

If 5000+ is really going down to under $300 my intial predictions of adoption were a joke. The enthusiast community will have an FX61 for under $300 and OEMs can easily put a good $70 dollar mobo with them. Most people would never notice the difference between DDR2 667 CAS5 and DDR2 800 at CAS5.

If AMD OEMs aggressively stock the X2 3600 it will be at $125 at most with the 3800+ going to $150. Price/perf wise at stock settings (which is where MOST people who buy these will be) AMD will literally kill.

Enthusiasts wanting to be faster than FX will cause a premium and a glut of other families. Only mobile will move alot but Core Duo is worth very little as of Merom.

Even more new chips have been slated so quantities of Core 2 will have interesting effects on Intel's 06 bottom line.

 

[xsandman]

$885 million in quarterly profit...

Yikes! - that's barely $3.5 billion a year on an annual basis - mind April-June is always the worst quarter.

Can Intel survive many more quarters of bleeding money like that?

How long can a firm survive making only $3.5 billion a year?

Intel damn well better have a really good product in the wings to rebuild profitability soon, or they may be in real trouble.

AMD's profits should be much better than that, and I am sure they will be, and AMD's balance sheet is in much better shape, reflecting their ongoing profitability.

Not sure if this is suppose to be serious or sarcastic

 

[bixplus]

Those are serious words. The baron's weak response shows his lack of trust in his own comments.

:lol: yeah, figured BM would run whenever faced with having to back his words.