Intel Corp’s Gordon Casey, director of investor relations, told the conference that the drop in third quarter gross margins reflects the company’s mix of products, including the manufacture of motherboards for Pentium machines, and Flash memory chips: shares of Intel fell sharply at the beginning of last week on concerns that a slight fall in margins could indicate a slowdown in its recent strong profit growth – but Casey reiterated Intel has an excellent outlook for the fourth quarter, although he declined to be more specific; as is often the case with these types of opportunities, the products have low margins, Casey said; What we expect to see is absolute growth in income as we go forward and then, layered in on top of this, additional income from these new products, but not at the same gross margin percentage – so the challenge is to convince the investment community this is good news, he said; he also said that later this year, Intel would announce construction of a new $1,000m plant and estimates it will have to invest $5,000m to be able to produce enough Pentium chips to meet demand which is why it started paying a dividend last year, because if you are paying something out, your share price is underpinned and takes less of a hit if you have to issue funny money or go and take on a lot of debt to raise so much new capital.
