I ask you, where would you like to start?
Stacey, which of the many things announced in this sort of guidance given
is the most important factor here? Yeah.
So, so, I mean, the quarter itself, revenues
were actually not too bad. It was the gross margins that really
killed them. And the guidance was clearly awful.
Revenues were. We're we're bad.
I mean, they they they're hockey stick in the back half from last quarter.
Clearly, the back half is not playing out the way they thought.
GROSS margins are falling into the abyss as there are.
They get higher costs on their chips. You know, clearly, clearly, they're in a
tough spot. I mean, they announced a number of
actions to try to salvage order to stop the ship from sinking.
They're cutting CapEx. They're cutting OpEx.
They actually finally suspended their dividend.
You know, they had they cut that by two

thirds a year, year and a half ago.
So they've finally suspended it, and they're doubling down on bringing in
partners that will co-invest on manufacturing capacity.
They sold recently. They sold half their fab in Arizona that they're building to
Brookfield, and they just sold half of their fab in Ireland, Fab 40, Fab 34 to
Apollo for $11 billion. And they got that cash flow in on.
That's kind of like this is like I've used the phrase worst earnings from
Intel in my career a number of times over the last year and a half, two
years. And this one probably takes the.
Yeah, this time. You mean it's probably the worst I've
seen. Yeah.
As you know, Stacey, I had the opportunity to speak to Intel's CFO days
into that when the numbers hit, and we got into a missed opportunity.
I guess this is what he said about the data center business.
And I'm trying to understand what he

meant.
But he basically is saying they were overexposed in CPU, and I guess, therefore,
by extension, underexposed in GPU. We all know the story.
Anyone that lives or works in the world of technology knows that all of the
investment is going to high-performance GPU accelerators.
Intel has won. Guaraldi. So, so explain what Dave meant
there, please. Yeah.
Yeah, you bet. So.
So they have been clearly overindexed. I mean, almost entirely indexed to two
CPUs. And there's a few things going on even
within CPUs, by the way, who they've been losing a tremendous amount of share
to their smaller competitor. So that's not been good.
And then over the last like, you know, as the AI boom has happened, we've had a
share of a shift in the spending patterns away from CPUs toward GPUs and
other types of acceleration. But I think there's a broader question
there.

You could argue, is that a cyclical
trend, or is that a structural trend? You're like in five years.
Is the data center CPU TAM bigger or smaller than it is today?
And like you can legitimately argue that that it's smaller.
So I mean, that's that's the issue. And the problem with Intel on that front
is they don't really have that much of an AI or an accelerator playing like
they have a product. It's called Gowdy.
They said that they're going to sell $500 million worth of what's called
Gowdy three this year. I mean.
It's effectively a rounding error, right?
I mean, you aimed that they're going to do four and a half billion in data
center revenues. And I think people think they're going
to do more than that in India. You know, data centers, they might be
$100 billion this year. And the 500 million doesn't make up
anywhere near, you know, like the air.

pocket that's happened.
Both is they've lost share in CPUs, and as that spending is has shifted, and so
that that's that's kind of the problem, and frugality at this point is based
like that that product is shipping. Like it's very clear the general demand for
relative everything else is very, very minimal.
Like it's just not enough that they close that gap.
So they don't really have much of an A.I.
story, unfortunately. Stacey, just real quick on cyclical, the
end markets for them and nontechnical. I mean, the way that the CFO put it to
me is that they just hadn't responded to the realities of their revenue, hence
the reduction in OpEx, CapEx, and headcount.
And yeah, but they did seem to be some glimmers of hope that coming into the
current period and the rest of this calendar year, there were improvements
in those markets, you know?

Yes, and no.
So, I think PCs in general are better than they were.
Remember, though, they don't sell PCs. They sell CPUs.
Right. And they talked about there's, there's
inventory that's digesting in the back half, which is helping down to impair.
It's impairing some of the revenue. So, this is something that I've been
worried about. We track the CPU channel pretty
religiously, and you get over shipment, you get under ship.
And I've been concerned that at least in Q4 and Q1, I think there was a fairly
significant amount of over shipment of CPUs relative to PCs, and I think
they're paying for that now. So, you have some cyclical downside
there. I think on the datacenter server side,
you know, there's been some green shoots that hopefully demand is getting better
again off of some awful years. But again, people now having like
recession worries and everything else.

And again, they're still losing share.
The data center Gowdy left isn't really enough.
And then some of their other businesses, you know, they have an FPGA business
called Altera, and all the FPGA companies.
That's the same thing. They're they're working off a ton of
inventory, and that's not really getting better yet.
They still consolidate Mobileye. They own most of that company's own Mobileye,
reported yesterday morning. We don't cover Mobileye, but factually they
slashed their guidance for the rest of the year, and so a bunch of revenue had
to come out from there on. It's just not great.
And part of it, I think, is their own doing.
Last quarter they sort of suggested we'd be seeing above seasonal growth in the
back half, and it's clearly, clearly not happening.
The macros, the macro is getting worse. And then on the cost side, again,
they've got some incremental cost

headwinds that are pretty severe, that
are impacting gross margins and cash and earnings and everything else.
So Stacy Rasgon, senior analyst at Bernstein Research, whether or not that
is and will be the worst Intel print of your career, I think you bring the
numbers down. Okay.
Very quick. We have 10 seconds.
10 seconds. The silver lining, the cash that they're
saving from the cost cuts and the dividend suspension, and the CapEx cuts,
and then all of the money they're bringing in
their live, I don't know what kind of a life it'll be they'll live.
That's probably $40 billion of incremental cash over the next couple of
years or so they'll live. But what kind of a life it's going
to be? I think that is the question that we're
okay with. Right.

Intel Shares Fall by Most Since at Least 1982

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Intel Shares Fall by Most Since at Least 1982

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