Last week I had the chance to sit down with globe-trotting Intel Chairman Craig Barrett. We talked about a number of issues: the global, macro economy (good); the domestic economy (not so good); the anti-trust allegations against the company (the chip market works, he says, and all you have to do is look at falling prices and increasing performance to prove it); and Intel's initiatives to get its technologies into emerging markets (he visits 30 countries a year!)
This week, it's Intel CFO Stacy Smith's turn to take center stage. He joined the "Squawk Box" crew live on set Monday morning for the first time, and it was a good visit. He talked about Intel's new, power-saving microprocessors. He talked about Moore's Law continuing for at least another 10 years.
But it's what Smith had to say about margins that will be music to investors' ears: He reiterated the company's bullish forecast from its last earnings report, and gave a nice reminder to shareholders that even in late August, Intel is solid.
Like those morning radio traffic reports, Smith's comments are only good until some kind of fender-bender happens and then everything can suddenly change. But right now, traffic is flowing nicely and he sees no bumps in the road.
Intel forecast a "significant improvement" in gross margins from Q2 to Q3, from 55 percent to 57 percent respectively. That's up 8 points year over year, with operating profit up 60 percent.
Smith says the weak dollar has helped sales around the world, particularly in Europe. The dollar's strengthening, such that it has been, has had a minor effect -- which is a little surprising. So the dollar's performance has had more upside than downside, even as it has improved.
He talked about the mobile momentum as well, with laptops accounting for more than 50 percent of PC sales last quarter, the first time that's ever happened. And with Intel's big initiatives in mobile microprocessors, the company's been positioned perfectly to take advantage of that trend. And continues to be.
Smith's comments about consumers were interesting: in general, no weakness on that front, either in the U.S. or in key regions around the world. So where is this recession and slowdown everyone is talking about? Intel simply isn't seeing it.
Smith is a straight shooter. I spent some time with him last week during a break in the action at Intel's Developer Forum. He's cut from the same cloth as his predecessor Andy Bryant, who now serves as Chief Administrative Officer: Both are understated. Both have a sense of under-promising and over-delivering. And that puts an even bigger emphasis on the bullish comments this company is putting forth.
And that's the reason investors ought to be paying careful attention to Intel: all this bullishness, yet this is supposed to be the company's slow period. Intriguing indeed.
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