INTC Can’t Manage Headlines, Either

Posted: December 9, 2005 in Uncategorized
All the headlines for INTC’s mid-quarter review were negative.
 
Buried at the bottom of one of the negative stories was the following:
Cody Acree, an analyst with Stifel Nicolaus, said that Intel’s problem stems from its inability to produce enough computer chips to meet demand.
 
"They are capacity constrained so that there’s not much ability to ship more than they’ve already shipped," Acree said, adding that the company’s strong third quarter probably took some business from the fourth quarter.
See the error?
 
INTC is getting whacked for selling 100% of what it’s making.
 
Usually, that’s a pretty good thing.
 
My conclusion: AMD isn’t gaining marketshare per se, rather, the market is growing faster than anyone guessed and vendors are turning to secondary suppliers like AMD.
 
I want to hammer INTC for bad capacity planning but it wasn’t so long ago that they were battling inventory issues. No doubt, there’s a "feast or famine" factor here.
 
Bottomline: Demand that catches everyone by surprise is good news for overall tech investing.
 
My telltale question: Is AMD is selling 100% of what it is making?
 
Not that I’ve heard.
 
Which means when INTC brings on more capacity, the pie will return to normal — and that will be good news for INTC investing, too.
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Comments
  1. Unknown says:

    so, if you were Intel would you add capacity? with the possibility of having to lose it later?? To ask the question now is too late… DJIA -1200 (Just a little ribbing) Keep it up great stuff!!!!

  2. Royal Farros says:

    Add capacity. They *won\’t* lose it later, that\’s the point… if we thought we were consuming a lot of electronic devices over the last decade, we haven\’t seen nuthin\’ yet.(Interesting timing: Here\’s a CSFB note today about Intel being "Better Positioned in 2006 for Competition." http://www.forbes.com/2005/12/13/intel-earnings-chips-1213markets13.html?partner=yahootix)

  3. Unknown says:

    That\’s the trouble with me I\’m always cautious, I love your response, which I read to mean, "we\’re just putting the garden hose down to fill the new reservoir" … and it looks like my last dig triggered a market turn…I do want to see a good year close too : )