Intel Margins Playing Against Earnings (INTC, SMH)

Intel Corp. (NASDAQ:INTC) posted EPS at $0.22 on $8.7 Billion in revenues, but there is a $0.03 tax item that increased earnings and there was $82 million in restructuring charges. First Call put expectations at $0.19 EPS and $8.54 Billion.  Intel shares closed up 1.4% on 108 million shares at $26.32 and anything above $26.04 on the day was an 18-month high.  Second-quarter gross margin was 46.9 percent, lower than the midpoint of the previous expectations and under the 48% expected by Wall Street.  Total microprocessor units were higher sequentially; the ASP (average sale price) was lower.  Sounds like the Avanced Micro Devices (NYSE:AMD) processor price strategy is not an entirely ‘in the past’ issue, even if Intel is the winner.

Here is Intel’s guidance versus estimates: Q3 $9 Billion to $9.6 Billion versus expected revenues of $9.36 Billion It is putting gross margins at 52% for Q3 and 51% for 2007.  Earlier we noted how the options expiration and strike prices could act as a magnet after today going into the expiration on Friday.  Shares are now down over 4% in after-hours at $25.25, so if this holds it looks like that $25.00 was the answer.  We’ll know tomorrow.

The Semiconductor HOLDRs (NYSE:SMH) closed up 1.7% at $41.00 on a new recent high not seen since the end of 2003 to early 2004; although the Semiconductor HOLDRs are down more than 1% in after-hours trading. 

Jon C. Ogg
July 17, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.