Thursday, March 10, 2005
As expected INTC provided mid-quarter guidance in which INTC raised revenue guidance to $9.2-$9.4B, the upper end of the prior range of $8.8-$9.4B, with the mid-point going from $9.1B (-5.2% QoQ) to $9.3B (-3.1% QoQ). Gross margin guidance was raised to 57% +/- 1%, up from prior guidance of 55% +/- 2%. The market was expecting tightening of the range but this was slightly more positive. Market is stuck trying to find leadership and even though we have heard more positive news from Semiconductors, I do not believe we will see semis lead. Semis have already run good 10% (SOX index) since early February in anticipation of these positive mid quarter updates (ALTR, XLNX gave positive updates earlier this week). Raising gross margins for Q1 sets a higher barrier for Q2 and it would be surprising to see INTC hold these margins going into Q2. I expect stock to not move out of a range until there is better color on Q2 demand/inventory and better margins appear in later part of the year.