On July 17, Intel reported that even with all of its new products, its profit margins and average selling prices are falling. Intel said its second-quarter gross margin was 46.9% -- its lowest level in years and below the midpoint of the company's guidance of 48% for the quarter. Yet, despite the second-quarter's lackluster gross margin, Intel stuck to its forecast of 51% gross margin for the full year, and matched analyst expectations of 52% gross margin in the current quarter. For years, everyone has said to buy Intel when the margins go over 50%. The company's guidance still says to buy, but its second quarter performance says to sell. Hard to say, maybe Intel still has a chance.
Meanwhile, Yahoo! reported net income for the second quarter fell to $161 million, or 11 cents per diluted share, from the year-earlier quarter's $164 million, or 11 cents per diluted share. Earnings excluding one-time items were $238 million, or 17 cents per share, compared with $241 million, or 16 cents per share, a year ago. This deterioration occurred even while gross revenue increased 8% to $1.7 billion. Most devastating for shareholders, the company guided down on revenue for the third quarter and the full year and it wasn't just a little guide down, but their projections for the full year were almost $200 million below previous guidance and analyst estimates. If there ever was any question whether Yahoo! is loosing to Google, it has probably been definitively answered tonight. No chance for Yahoo!
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