Sunday, March 05, 2006

I predicted 15-20% INTEL 1Q06 revenue decline back in Feburary

Back on Feburary 20, 2006, I projected that INTEL will suffer a 15-20% revenue decline in 1Q06, now INTEL's 8-K filing admits a 10% - 20% decline. For me, this was no surprise, and I predicted even larger INTEL revenue drop for 2Q06.

While smarter folks such as Prudential, Morgan Stanley, Joe Osha have figured it out, the real retards are still scratching their heads.

Dan Niles, CEO of Neuberger Berman Technology Management, said that AMD couldn't possibly have gained enough share to force Intel to drop revenue by $500 million. Why? He explained: "The math doesn't work, since Intel's share is nearly 80%".

This kind of statement makes me sick, such retarded words off the mouth of some CEO? We have to improve our education system. My suggestion to folks such as Dan Niles is this: go back to elementary school and re-learn the basic logic.

Joe Osha, though often gave in to the dark force, is probably one of the smartest, back in October 2005, he said that the situation between AMD and INTEL was like a head-on collision of two high-speed trains. I say Joe Osha is smart, because I found that he was the only Wall Street analyst who saw the problem, or disaster for INTEL.

One word: FAB36.

As of 4Q05, AMD captured 21.4% market share with the 200mm FAB30 running at 120 MPH. Now, it's a matter of simple math to compute the output of FAB36, which started production in Oct 2005. You can go read this whole journal, I analysed the production potential of FAB36 numerous times. Some people don't believe my projection of AMD capturing 40% of x86 market exiting 2006, so I did the die count here.

If I assume that FAB36 is in a slow cruise mode and only does 4000 wspm at 90nm, that's enough for an extra 5% of the PC market. As of 4Q05, INTEL market share dropped to 77%, a 5% drop, it's 72%.

But, as I pointed out in January 2006, FAB36 is in high gear (notice the GOOG symbol there?).

The math computes, because INTEL was not only losing share, it foolishly lowered prices trying to stop the inevitable share loss. I proposed the ONLY way for INTEL to survive: kick out DELL and raise prices, but INTEL folks won't listen.

The collapse of INTEL will be sooner than I previously expected. Increasing decline of market share coupled with lower ASPs will result in even more drastic drop in revenue. Unless INTEL follows my advice, I project it to suffer operating loss in 3Q06.

6 Comments:

Anonymous Anonymous said...

Right on!!! Most of the analyst do not have a clue, their analysis is base on past history. AMD will be doing great until Intel improve its technology in par with AMD.
Keep up the good work, Sharikou, I got a lot of valuable information from your blog.
Why is HP spend so much effort and money , try to revive the Itanium ? It is a dying product, can you elaborate the reasons ?

10:41 AM, March 05, 2006  
Blogger Sharikou, Ph. D said...

HP on Itanium is a profitable business. Look, HP owns the Itanium market. Hp got rid of its Itanium design team, IBM and DELL exited, SGI is expected to BK soon, there is a Itanium niche, and HP eats it all. For each Itanium box sold, HP probably enjoys a 70% gross margin, easy money, all they pay is the price for the Itanium chips INTEL spent billions to design and manufacture. HP is very comfortable there. Only INTEL is suffering. I once wrote HP is killing INTEL: by keeping INTEL hooked on Itanium while selling largest number of Opterons. But, for INTEL, Itanium also serves a purpose, it's INTEL's only pride, without Itanium, INTEL is reduced to an AMD64 clone maker.

11:04 AM, March 05, 2006  
Blogger Eddie said...

Itanium: Oh-no Sharikou. Itanium distracts HP to go into the highest end with Opterons. Itanic last gasps of air are a dead end anyway. By the time HP switches, or more precisely, tries to switch to high-end Opterons, it would be trailing at least Sun and IBM, formidable competition.

They would be better off ditching Itanium for good in the mid/long term.

Fortunately, Itanium's protracted death is only beneficial for AMD
(http://chicagrafo.blogspot.com/2006/01/good-news-for-amd-investors.html)

Todospara1/Chicagrafo

11:33 AM, March 05, 2006  
Anonymous Anonymous said...

Right on,I based my purchase of AMD shares just after Hector brought 6 Million for $3.34 each my 1500 were at 6$ each I based my
purchase on the technical spec's of Hammer and sledgehammer and the tie with the alpha bus spec..any the move by Hector.
All Intel followers would be interested to see that some of their managers dumping Intel stock for some reason!? but be told
by these expert analysts not to sell off Intel.. vested interests?

11:43 PM, March 05, 2006  
Anonymous Anonymous said...

The knives are out for Intel, its had it too good for too long, AMD is the blade, IBM is the shiv.

12:25 AM, March 06, 2006  
Anonymous Anonymous said...

tks Sharikou!!!!

8:37 AM, March 06, 2006  

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