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Talk about burying the lead. The headline and top of this Reuters story would make you think Intel's dividend is jeopardized by the EU’s anti-trust fine. But that’s not what has investors concerned.

Not until you get to the end of the story do you see that the chipmaker’s gross margin slipped by almost eight percentage points in the first quarter of the year, thanks to an inventory build-up reflecting the recession’s hit to demand.

And while CFO Stacy smith says the company expects margins to return to normal in the second half of the year, now that capacity has been cut, that’s a lot of ground to make up.

Also note that Smith said the second half, not the second quarter. Whenever I hear someone say something's going to happen six months from now, I take that forecast with a grain of salt. 

Comments (1)

	1. 05-27-2009 17:27
	Well, I think you can say goodbye to any big stock repurchases before you start worrying about the dividend. Intel spent over $7 billion repurchasing shares last year and another $7 billion+ over the prior two years. They cut their cash and cash equivalents in half from the end of '07 to the end of '08. If you look at Q1, they didn't repurchase any shares and increased their cash balance a bit. I'd expect more of the same until margins stabilize. Registered

Matthew Quinn

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