The Upshot: Intel Finds Honesty Such a Lonely Word

Investors, jaded and otherwise, might expect a better attempt at spinning than the folks at Intel (INTC) gave during last night's conference call.

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Granted, warning your revenue is going to fall 25% from the previous quarter doesn't leave much wiggle room, but a lot of companies give it a shot anyway. Not Intel.

While the company's official statement prior to its call did contain a sentence saying if economic growth recovers, Intel would be fine, officials on Thursday night's call sounded more like they'd been given an invitation to a beheading -- their own.

The pattern in these conference calls is generally kind of predictable; analysts ask what happened, struggle to understand where the shortfalls came in and attempt to pull information out of the company executives, who repeat some vague promise that things will recover later on.

Last night, several queries focused on when things would get better and Intel didn't come close -- they didn't even fall back on the ol' visibility thing -- flatly saying that business has dropped to a point that has them screwing themselves into the ground.

"We can't look at the worldwide economy or Intel's economy and give you a lot of hope," said Andy Bryant, chief financial and enterprise services officer, glumly. For a company that's the leading manufacturer of chips for PCs, and garners significant revenue from several other businesses, that's darn blunt.

The extent of the dreariness seemed to almost have analysts feeling sympathetic. At the end of the call, Lehman Brothers' semiconductor analyst Dan Niles asked Sean Maloney, director of sales and marketing for Intel, whether the 25% decline in revenue was caused more by an overhang in inventories or rather, a significant slowing in demand.

Clearly, the hope among bulls would be that the former is to blame -- high inventories are more a lagging problem, the result of overproduction and less demand than expected. If demand picks up, situation under control, right?

No dice, Chicago.

"The end-user demand, whether it's in PCs, servers or flash memory, the demand isn't where we want it to be -- that really is the message here," said Maloney. "There's no indication of a sign of an uptick."

Ugh. That wasn't the answer Niles was looking for. Following the call, even he admitted he was trying to see if the revenue story wasn't as lousy as it sounded. "I was shocked by their answer," he said.

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