WTH are you are talking about ? He said tablet units would quadruple next year to 40m units. They are going aggressive on pricing to grab android/phone marketshare next year which is not good news for Nvidia.
QCOM was on the ropes yesterday until BK opened his mouth and started uttering smooth ARM Fab mood music.
Too late now without making BK/SS look like total azzes. What they have to do now is reverse that statement in REALITY i.e. quietly un-subtract that 1.5% GM hit they were planning on behalf of Atom so they can do some early profit beats next year.
As to foundry business it only makes sense to do it for OEMs and at device level pricing i.e. if it replaces an IA die part in a competitor it has to do it at the same level of profit to Intel, this usually works out to around 7-10% device price level.
It will have to do it the hard way now, probably when the 200 MA passes 26 (we are talking 2015 at earliest for that) or if there is a surprise beat one quarter. In the more immediate short term the 50 MA at 23.66 has to hold over the coming days otherwise INTC will get stuck underneath it. They should have spent less time joking, laughing and discussing Japanese culture yesterday and thought up a better business strategy to match their great technological one because the current one is clearly not fit for purpose. If you don't give the prospect of growth in some metric you will never attract new shareholders.
Flatness is stock death.
Unfortunately it was totally self-inflicted as they had the opportunity to predict greater profits on flat revenue next year but chose to go on a silly price war with the ARMy about a year or two before necessary because with future older generation Atoms when it would not have cost them anything except die cost.
BK is not up to the job.
' IMHO INTC is preparing its shareholders that it may take drastic measures in the future if design wins in mobile is too small: join them if you can't beat them.'
This is madness. This kind of race to the bottom thinking is what prevented Smith bragging about how profit would be up on flat revenue next year and the stock would have been much nearer 26 than 24 today. He has to cut back on all excessive Atom subsidization and allow it to grow profitably and organically albeit slower. He just cannibalized Intel's GMs next year with this stupid line of thinking. Is it too late now for Dadi and some proper cpu orientated thinking ? The most difficult task Intel face is maintaining its gross margin dollars in the face of the ARMy Ants and he just helped them along by chucking away top-line Atoms for virtually free next year !
1) Is BK really Rory Read's even dumber geek twin ?
2) Is BK really working for ARMH shareholders rather than INTC ones ?
'Regardless a small trade-off in margins to get to 4X tablet growth is well worth it. '
It won't be worth it to the stock price because it will stunt its growth next year if there is no profit increase next year because of it. It is symptomatic of the old Intel who felt it had to rush in price-wars with AMD for single digit percentage gains while asps lost much more per cents in the ensuing bloody battles. Atom can succeed on its own merits in time to become numero uno and without throwing money at to get arbitrary early marketshare which will hurt the following year's models as prices would have already been lowered before their arrival. It was the 2nd strategy mistake in this meeting, the other one was the openness to fab anybody's ARM chips if the price is right regardless of the long-term competitive effect on x86. BK and SS were too smug, they don't yet fully realize what negative forces they have unleashed.
The point is without that 1.5% hit they would have not guided flat profits for 2014 too. They should only use n-1 process Atoms as price weapons not the latest n process atoms too. Creates a bad precedent and basically says if there is any growth of any sort in 2014 we are not expecting it. He's basically killed the stock guidance for a year unless there is a surprise upside.
' That ARM would move up on a day where Intel indicates ...' it is not averse to becoming another ARM foundry for the right price is not laughable.
slide 19 of 2013_IM_Smith.pdf
–Increased operating loss on higher NRE and contra revenue
–Corporate gross margin impact of (1.5pts) in 2014
Intel's x86 strategy is fine now. They have gone from nowhere in mobile to arguably having the best two tablet chips, Haswell-Y and Bay Trail. Look what ARM chips fabbed in inferior fab processes have done to the PC industry, Now what will Intel fabbed ARM chips do again to that same PC industry ? Why would Intel in their right mind indulge in purposely aiding external cannibalization by companies who are prepared to live on lower GMs than them ? It's a knee-jerk panic move, unnecessary when the x86 pipeline is full enough to do the job by itself. This is how great companies can die, by choosing a wrong strategic fork in the road.
Don't know. For the first time since 2006 I now have doubts about Intel and its business strategy.
How about this for a nightmare scenario ... just say someone keeps building good ARM chips continuously like say Apple and Intel makes them for them and PC chips say fall behind eventually for arguments sake. Now what if Intel has a process hiccup one generation and another foundry does not so it loses Apple's business to them. With not so pricey x86 chips now and failing external foundry business does Intel look like Intel any more or more like AMD before it sold its fabs ? This is obviously a worst case scenario but it does show the potential future long-term pitfalls of enabling competitors.
They are not doing it to compete organically but to quadruple tablet market share in a year by using price as a weapon but at the expense of 1.5% company gross margins ! They did the same silly thing with AMD competing in unnecessary price wars for years and all that happened was that marketshare roughly remained the same for both but PC asps collapsed during the price wars.
Once upon a time Intel used to get virtually all the money from the world's application processors. Those times will never return if it aids competitors to x86. With its process lead it has a chance to turn the whole ARMy into AMD eventually when it comes to profits but not if it fabs their chips. It will help keep them alive. ARM is like a cancer to Intel, it needs to be cut out not offered a host body.