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Reuters wrong over NOR flash comments by Intel’s CFO |
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Jan 17, 2007 at 03:49 PM |
Listening to the Intel conference call last night, analysts seemed more concerned with poor gross margins and potential market share gains in the quarter than asking about whether the rumours that its NOR Flash operations would be sold off were true.
Speculation has been rife that this is imminent with much of the recent round of rumours coming from undisclosed Intel employees based in Israel, initially by Israeli newspapers and then picked up by Reuters.
Since then an updated story...
http://today.reuters.com/news/articleinvesting.aspx?type=mergersNews&storyID=2007-01-17T010632Z_01_L16624752_RTRIDST_0_INTEL-ISRAEL-UPDATE-3.XML
...from Reuters quotes Andy Bryant from the conference call as clearly confirming Intel's continued commitment to the NOR flash operations.
I found the story rather interesting, as the quotes are shortened versions of what Bryant actually said last night and differed considerably from the meanings I took from his answers. Checking my shorthand notes and reading the complete transcript of the conference call that is available at SeekingAlpha (http://seekingalpha.com/article/24326) begs the question of whether Reuters have gotten it far from right?
The transcript portion in which Bryant responds to the question regarding the NOR operations is pasted below.
Jim Covello - Goldman Sachs
Good afternoon, guys. Thanks so much. Andy, could you update us on the plans through the strategy with the NOR flash business at this point going forward?
Andy Bryant
The plans with the NOR strategy with Flash is - Paul and I keep reminding them - we expect to see quarterly improvements in pre-tax. I would say we made some last year, we kind of flipped back a little in the fourth quarter, which was disappointing to us, but there is no question the team is dedicated to turn that thing around and we are driving as hard as we can.
Jim Covello - Goldman Sachs
What do you think will ultimately drive the go or no-go decision there?
Andy Bryant
Well, right now, there is only a go decision, and the go says make money and if you don't make money, we have to figure out whether we have to resize the business or whether there is some way to restructure it to make it make more sense for us.
Jim Covello - Goldman Sachs
You think that at some point during '07, you would have to make that decision if the results did not turn around?
Andy Bryant
I guess I could say yes to that, but I would rather say I think Brian and the team are going to turn the results around. That is the goal.
I don't think I am splitting hairs in saying that Bryant at no point in this short exchange actually committed himself in saying that Intel is not going to sell-off the NOR operations. Indeed, as the speculation has mounted, he could have easily made it clear by saying that NOR is not for sale, full stop!
But he didn't!
What he did say was the possible intention to ‘resize' and ‘restructure,' which could indeed mean selling it off in 2007!
The Reuters story is far too ‘precise' in its shortened version of what Bryant actually said, which is taken out of context in part.
Intel had made it clear last year that no business unit was sacred IF it wasn't turning a profit. NOR hasn't been turning profits for quite some time, and so the speculation is expected to continue, especially after Bryant's less than convincing support for the NOR operations.
There is, of course, a get-out clause that Bryant hasn't used yet and some observers have not even seen! This relates to the new NAND Flash operations that the NOR business has realigned. Revenues from NAND are starting to have a positive impact on revenues for Intel, though margins are poor. IM Flash Technologies will be ramping several 300mm fabs hard this year, while becoming far more competitive in die shrinks with major competitors such as Samsung, Toshiba and Hynix.
Though I doubt Intel wants to carry the NOR operations in a loss-making way much longer, the Division as a whole should only do better and better in 2007. This may give Intel further time to get NOR profitable and keep it after all.
More clear-cut statements from Intel's CFO could quash rumours easily. The Reuters story didn't do it for me!
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| Senior Technical Program Manager (Dublin, Ireland, 02/04/2008) | | Senior Embedded Design Support Engineer (Shannon, Co Clare, Ireland, 19/03/2008) | | Embedded Support Engineer (Intel Shannon, Co Clare, Ireland, 19/03/2008) | | Senior Component Design Engineer (Intel Shannon, Co Clare, Ireland, 19/03/2008) | | Wireless Market Development Manager - Sweden - Semiconductors (, 29/08/2007) |
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