Tuesday, July 17, 2007

Intel's Gross Margins Below Expectations




INTC Intel reports in line EPS, beats on revs, gross margins below expectations; issues in line Q3 rev guidance, lowers FY07 capital spending expectations (26.32 +0.37)

Reports Q2 (Jun) earnings of $0.19 per share, excluding 0.03 tax benefit, in line with the Reuters Estimates consensus of $0.19; revenues rose 8.4% year/year to $8.68 bln vs the $8.55 bln consensus. INTC reports Q2 gross margins of 46.9% 48.4% Street expectations. Co issues in-line guidance for Q3, sees Q3 revs of $9.0-9.6 bln vs. $9.34 bln consensus. Sees Q3 gross margin of 52% plus or minus a couple of points, vs 51.6% street expectations. INTC reaffirms FY07 gross margins of 51% plus or minus a few points, vs 51.2% Street expectations. Capital spending: $4.9 bln plus or minus $200 mln, lower than the previous expectation of $5.5 bln plus or minus $200 mln, primarily due to manufacturing efficiencies... Regarding Q2 gross margins of 46.9%, lower than the midpoint of the previous expectation. Microprocessor margins were as expected with higher unit shipments offset by lower average selling prices (ASPs). Demand for NOR flash products was lower than expected, resulting in impacts that lowered Intel's gross margin by one point. Courtesy briefing.com

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