Media See Intel Profit, Miss the Margins

The Business Press Maven proposes that we put the chicken and the egg in the microwave for a moment as we talk about Intel (INTC) and the microchip.

Now, let's ask that age-old question, reinterpreted slightly, with Intel's quarterly numbers in mind: Which should come first when reporting them, sales or profits, net profits or underlying margins, and then how all those numbers did vs. last year or beside expectations?

Hey, what's that I smell burning?

Much Too Giddy

"Chipmaker Intel sees profit jump 44 percent," yelled The Associated Press approvingly in a headline on the chipmaker, which is engaged in a pitched battle with Advanced Micro Devices (AMD) over price.

But perhaps we should forgive the wire cubs their sins. Members of the business media do not have much experience at, well, running a business, and that consistently makes them overly impressed with flashy number jumps and blind to underlying profits.

We'll touch upon the various ways this can play out, though The Associated Press went that most direct route. In this article, much too giddy about Intel's report Tuesday, it highlighted that profit jump -- and in absolute terms. The article says almost nothing about more recent troubled trends in their business, thanks to the price war.

And as anyone knows who has done so much as set up a lemonade stand across from a rival, a price war is certain to carry with it lower profits than you expected. And to take it one step further, those gross margins will possibly continue to underperform for the foreseeable future.