Intel can't figure this out, so who can?
On a conference call chockablock with qualifiers, Intel's brass made it quite clear that nothing is clear as it gazes into its crystal ball.
If these were normal times, Intel's quarterly earnings report would barely generate more than passing interest. A penny above, a penny below--only Wall Street and day traders give a damn.
But these aren't normal times. Intel today said that its fourth quarter revenue may be anywhere between $10.1 billion and $10.9 billion. That's one helluva wide margin. You see, because of all the recent nastiness in the markets--they just don't know.
Intel explained that the stock market's slo-mo meltdown has created a "high degree of uncertainty" where Intel will finish up the year. That's a big change because this company is usually as precise as a cruise missile in narrowing down its target.
Speaking on the conference call with analysts this afternoon, CEO Paul Otellini allowed that while the just-concluded quarter played out "mostly" as expected, he said the financial crisis had created "some kind of stress that may impact" Intel's business in the current quarter. He's just not sure how.
This much he does know: consumer purchases remain "light at this point in the quarter" and Intel can't predict whether the stock market collapse will keep shoppers away from the malls this December.
You can't fault Intel's brass for not having a better crystal ball. Messrs. Bernanke, Paulson and Bush don't know with any assurance how things are going to end up, either. If you're looking for the silver linking, Otellini did remind his listeners that the current economy bears little resemblance to the post-dot-com downturn.
"One of the things I remember...was that people stopped buying computers," he said. What with all the bankruptcies piling up, there was no shortage of hardware and you could buy second-hand computers and servers at sharp discounts to their sticker prices.The other statement of note came in the text of the press release announcing the earnings. They deserve quotation in full:
Current uncertainty in global economic conditions pose a risk to the overall economy as consumers and businesses may defer purchases in response to tighter credit and negative financial news, which could negatively affect product demand and other related matters. Consequently, demand could be different from Intel's expectations due to factors including changes in business and economic conditions, including conditions in the credit market, that could affect consumer confidence; customer acceptance of Intel's and competitors' products; changes in customer order patterns including order cancellations; and changes in the level of inventory at customers."
If he was liberty to do so, Otellini would have directed his listeners' attentions to that qualifier. But as the boss, he figures there's no sense in stirring up more panic. Still, this is a holy sh*t moment with Intel basically flipping a coin about where it thinks it's heading. And you know what? The rest of the technology industry is in the same boat.