Richard Davenport's  Instablog

• Q2 revs $8.024B (+10.2% above Street $7.284B)
• Q3 rev guidance $8.5B (+8.8% above Street $7.813B)
• GM 51% (vs mgmt guidance mid-40s)
• Q2 Q/Q rev growth highest since 1988--over 20 years!
• Supports our long position on INTC, PC supply chain (4.9.09); also CCMP, WFR, distis
• Multiple positive beneficiaries, including AMD, NVDA, MU, MRVL, WFR, many others

INTC reported Q2 revs of $8.024B, +10.2% above Street expectations of $7.284B. The Q2 Q/Q rev growth of +12.3% is the highest in over 20 years (since 1988). GM of 51% was above mgmt guidance of mid-40s. Inventories of $2.805B declined -7.9% Q/Q. Mgmt guided Q3 revs of $8.5B +/- $400M, +8.8% above Street expectations of $7.813B.

We expected INTC to beat and guide higher, having published on the name 38 times since we went long INTC and several other PC supply chain names in April (see SMSC: Positive PC Supply Chain Indicator, 4.9.09). Recently, we have seen numerous positive PC supply chain data, especially from Taiwan (see Taking Stock: Initial June Taiwan Data Very Positive, Well Above Seasonal Norms, 7.9.09).

Yesterday, DELL guided revs that were only in line with Street expectations. As we wrote yesterday, we did not think that was a negative harbinger for INTC, and in fact suggested good things for comp HPQ. INTC's report confirms that.

We view INTC's very strong results and guidance as supporting our Long position on PC supply chain names AAPL, AMD, ATHR, AUTH, CY, DELL, HPQ, IDTI, LSI, LXK, MRVL, MU, NVDA, PMCS, SMSC, STX, SYNA, and WDC; raw materials suppliers CCMP and WFR; LCD supply chain names GLW and HIMX; and distributors ARW and AVT.