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Technology Stocks : Silicon Motion Inc. (SIMO)
SIMO 42.94+0.7%2:03 PM EST

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From: Elroy4/26/2019 1:47:48 AM
   of 2099
 
Some tidbits from INTC's conference call that may affect SIMO......

coming off a record 2018, our top line results came in slightly higher than expectations, with upsides in the PC and IoT segments, offset by incremental NAND pricing weakness.

The decline in memory pricing has intensified.

We are also anticipating an incrementally more challenging NAND pricing environment.

Our memory business was down 12% due to continued NAND pricing pressures, offset by NAND data center and client bit growth. Operating income for this group is down driven by NAND ASP deterioration and demand softness, resulting in inventory revaluations.

We expect Q2 revenue to be $15.6 billion, down 8% year-over-year. Our data-centric businesses are expected to decline in the high single digits year-over-year as memory pricing declines weigh on our NAND business and DCG customers continue to consume inventory and absorb capacity.

But Q1 is just the dynamics of all of that ramp cost going through cost of sales. That was planned and that was anticipated. The not planned in the quarter was just the (NAND) ASP declined much greater than we had anticipated for NSG. We were in the -- we were expecting kind of mid-20s to 30% ASP declines. The reality is it was closer to the mid-40s. And as a result, and George flagged this, but as a result, we had to take a lower cost or market reserve against our inventory balance in the quarter. That cost us over 1 point of gross margins in the quarter. That we did not quite anticipate.

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The running theme throughout the call about NAND (a small chunk of INTC's total sales) is that NAND price declines in Q1 were worse than expected, and NAND is a main "problem area".

I wonder what WDC is going to say, when NAND price is weak their NAND sales stink, and their disk drive sales go away forever as the disk drive is replaced by a cheap NAND drive.
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