The hidden messages in INTEL's 4Q05 report

You can uncover more truth from INTELs 4Q05 report: INTEL CPU business is in a mode of abosolute decline in a growing PC/Semi global environment.

In Q3 2005, INTEL's total revenue from microprocessors was $4.936 + $2.331 = $7.267 billion.

In Q4 2005, INTEL's total revenue from microprocessors was $4.929 + $2.400 = $7.329 billion.

INTEL's Q/Q growth was near 0 (less than 1%), in a very strong holiday season. IDC reported 17% global increase in PC shipments in 4Q05.

One should keep in mind that the revenue from the mobility group included CPUs such as the INTEL StrongArm processors used in most PocketPCs. The PDA market is growing 20% year over year. INTEL signed up PalmOne and Research In Motion to uses its StrongArm processors; all DELL Axim PDAs and most of HP's iPAQs uses INTEL CPUs. So this part of the revenue (hidden in the mobility group result) must have grown substantially, and the conclusion must be that INTEL's PC processor business is not just slowing down but in decline.

INTEL expects a drop of up to $1.1 billion from 4Q05 to 1Q06, therefore the CPU revenue for 1Q06 could be as low as $7.329 - $1.1 = $6.229 billion.

In Q1 2005, INTEL CPU revenue was $4.944 + $1.917 = $6.861 billion.

In other words, in 1Q06, INTEL's CPU revenue could drop as much as (6.861-6.229)/6.861 = 9.2%, on a year/year basis.

Again, IDC projected over 10% year/year PC growth for 2006.

Where will the missing money and units be? Three letters: A M D.

AMD projected 70% growth for 1Q06 on a year/year basis.