Analyst Ashok Kumar says he was looking for second quarter revenue of $6.6 billion. He says the revenue shortfall was a result of a Pentium 4 inventory drawdown, Hewlett-Packard / Compaq cancellations, and weak back-to-school trends. Weakness in desktop PCs and Europe offset in-line performance by server and mobile segments.
With the weak back-to-school season, Kumar says he does not expect seasonal trends to be evident until the latter part of the third quarter. He adds that margins are down 400 basis points on a weak product mix. He cut the $0.66 2002 earnings per share estimate to $0.57, and trimmed the $28.2 billion revenue estimate to $26.7 billion. He keeps his outperform rating, but sees downside risk to $19-$21.