Mr. Scovel: It was much better than I had expected and a lot better than most had expected, both from a trailing Q2 perspective as well as the outlook for Q3. And it's tough to argue with Intel (INTC) because they've got so much of the PC market. However, that being said, I'm still very nervous about this economy and I'm not convinced there isn't more than a bit of inventory shuffling going on here. Intel admitted that they see stabilization in the market, channel inventory restocking, and then some filling of inventory in anticipation of a stronger seasonal second half. That's a bunch of inventory flying around, and I'm not convinced how much of it is real yet.
TWST: Kevin, what is your take on the Intel story?
Mr. Vassily: I think as Dan pointed out, it remains to be seen as to the
ultimate sell-through of the production these guys are targeting for Q3. I think
when it seemed as if the world was coming to an end in December of last year and
early this year, you had a significant ramp down in production levels across the
semiconductor food chain. That was clearly an overshoot to the downside. So some
of the uptick in Q2 and the optimism about Q3 really has to do with a resumption
of what might be considered normal seasonal demand trends right now. But the
interesting thing, and I think Dan's skepticism is warranted here, are the
normal demand trends in a horribly bad recessionary environment; while on a
relative basis, they might look good as you compare it to Q1 and to late last
year, in the absolute it isn't all that great. So I think a lot hinges on what
back-to-school sell-through looks like as we approach the end of August and
early September, and we're still a little ways away from that. So I think there
still is reason to be cautious here.
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