This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Intel Grooms Its Supply Side

With supply concerns sinking Intel's (INTC) stock to a three-month low, the chipmaker's progress in meeting customer demand will be a key issue during its midquarter update Thursday afternoon.

During the company's most recent quarterly earnings report in mid-July, CFO Andy Bryant said Intel's factories were running completely full and that it was missing out on revenue opportunities because it couldn't make enough chips.

This prevented the company from boosting its gross margin target for the back half of the year, typically Intel's strongest period. Investors saw this as an indication that the best of times had come and gone; the stock subsequently dropped from a one-year high of $28.71 to its current level of $25.66.

And indications are that issues of supply and demand haven't abated. In the six weeks since Intel reported results, Dell (DELL), Hewlett-Packard (HPQ) and Gateway (GTW) all have cited difficulties in getting parts they have needed.

Dell, which gets all of its computer chips from Intel, said during an earnings call on Aug. 11 that "tightness will continue through the third quarter." And as recently as Wednesday, H-P CFO Bob Wayman said there is a "little tightness in desktop microprocessors from Intel, but we believe it is manageable."

Intel said in July that its primary constraints concern chipsets, which are groups of semiconductors that surround a microprocessor in order to help it interact with other devices. Chipsets make up only about 10% of Intel's revenue, but Intel also has said it was tight on its primary microprocessors and flash memory.

This isn't a situation that gets fixed overnight. Intel boosted its capital expenditure budget for the second time this year in July and announced plans last month for a new factory in Arizona, but that facility won't start producing chips until the second half of 2007.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,780.33 +2.18 0.01%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs