Wednesday, 7 January 2009

Bellwether#4 - Intel

(By Richard Holway) If you read my Bellwether series before Christmas (see 20th Dec 08 - Rounding up the Bellwethers), you will be aware of the importance of leaders like Intel in assessing the health of the tech sector. Last night issues a second warning. In Nov. it warned that Q4 2008 revenues would be 14% lower – now it says they were 20% lower. See FT 7th Jan 08 – Intel issues second warning on revenues and an excellent review in The Times - Intel left reeling.

Now that’s not only a BIG decline but it shows how quickly the situation is changing. I’ve always believed that if you are going to say something bad, throw the kitchen sink in as well. That way, you might be able to give some good news next time. Double doses of bad news are…well, very bad news.

Also, 20% is a big decline in both % and actual revenue terms. 20% of Intel’s annual revenue means that its c$8b off 2007 levels. If Intel is hurting this much, then some of the weaker/smaller players must be terminal.

It also shows that Bellwethers can be wrong too. On 19th Dec 08 I wrote Bellwether#3 – Semiconductor Book-to-Bill This showed that in Q3 2008 forward orders for semiconductors equalled revenues for shipped product for the first time in months. The ‘conclusion’ was that a nadir had been reached. Intel rather indicates that this was widely wrong. Things are indeed getting worse.

And let me remind you what Peter Rowell (Ch of Regent) said when he suggested I looked at this Semiconductor Bellwether - “these guys are right at the front end of the food chain. In other words they supply the equipment …to build the chips …which go into the systems …that run the software …that require the services…etc.”

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