BW: Chipmakers Face a Chilly Fall

Business Week takes a look at the chip sector and it doesn’t look so good. Intel and Texas Instruments will provide revenue guidance today. I’m guessing that Intel will tighten the high side of its guidance. TXN is at a 52-week high right now. However, Business Week has to take its mandatory shot at Dell.

“Dell’s results demonstrated that the industry is in a phase of being unit-rich but revenue-poor,” says Ashok Kumar, an analyst at Raymond James & Associates. “This isn’t only specific to the PC industry but will also be apparent in handsets and in emerging markets as well. Price points will continue to drop.”
Adding to Intel’s woes, rival Advanced Micro Devices is forcing Intel to push down prices on its Xeon chips for servers, the computers that run Web sites and corporate data networks, notes JPMorgan analyst Chris Danely. Intel may tighten its revenue forecast to between $9.8 billion and $10 billion for the fiscal third quarter and maintain its forecast for gross margin, a yardstick of profit, of about 60%, Danely says. Intel now expects revenue to come in between $9.6 billion and $10.2 billion.

I think it’s a stretch to say that Dell is “revenue poor.” The company’s revenue shortfall could have been made up very easily last quarter. HP’s Douglas Hurd continues to be the media darling. WSJ has more on HP’s analyst meeting.

Posted by on September 8th, 2005 at 12:09 pm


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