Through The Fly's Eyes: Intel Corp.
Good Gross Margin Guidance; Revenue Forecast Still Sloppy
Intel (INTC) reported flat average selling prices (ASPs) which is a good sign for the company versus week ASPs for quite some time. In addition, gross margins increased sequentially from 4Q06 to 1Q07, another good sign. Typically, investors would expect gross margins to drop in the first quarter.
- Revenue for 1Q07 hit the lower end of guidance, not too impressive
- Gross margin and revenue guidance for 2Q is weak, but it appears Intel is low-balling gross margins for 2Q, possibly due to start-up costs for 45 nanometer technology
As we blogged last week, Intel's stock appears to be washed out--with not too many sellers remaining. Historically, Intel's stock has done well with gross margin expansion, which appears ready to occur by year end.
There is not a big rush to get into this stock, but chip away during the spring and summer on market weakness for what appears to be a stronger fall and winter on the horizon for the chip giant.