Intel (Nasdaq: INTC) is sending mixed signals right now. Fourth-quarter earnings came in slightly below expectations, despite the indications from IBM (NYSE: IBM) about a robust global technology market.

Intel's management said its chips were selling like hotcakes, and blamed the shortfall on flash memory, where unit volumes are in a perpetual climb to the stars, but average selling prices are in an equally permanent free fall.

That's certainly bad news for memory specialists SanDisk (Nasdaq: SNDK), Micron (NYSE: MU), or Spansion (Nasdaq: SPSN), but apparently it was bad enough to hurt even mighty Intel as it dips a toe in the memory waters.

Say what?
Here's where things get confusing. Next quarter's gross margin is supposed to drop a couple of percentage points, but management is unwilling to explain why. In response to an analyst's question late in the earnings call, CFO Stacy Smith explained that pricing pressure on NAND flash chips will continue, but should have a "negligible impact on the gross margin in Q1."

Elsewhere, CEO Paul Otellini noted, "It would be imprudent not to be cautious about" the macroeconomic environment, but the company's guidance didn't include any discount for that. Three-quarters of Intel's sales happen outside the struggling American economy -- another parallel to Big Blue.

High-margin, high-growth chips for servers and notebooks were held up again and again as paragons of opportunity and strength, and yet near-term forecasts came in lower than this period's results, and below Street estimates.

Smith fended off another question this way: "As I look at the full year, I see some good news based on cost improvement; I see some good news based on divestitures. I don't have negatives that are hidden in that margin forecast." The analyst probed more, asking, "How come it's not higher for the full year then?" Running out of smoke screens, Smith could only say, "It is the gross margin forecast that we have for 2008."

Fess up!
So what is Intel trying to hide? You can't lower margin expectations and hope nobody will ask why the numbers don't add up. The timing is strange, too; Intel leads rival Advanced Micro Devices (NYSE: AMD) in manufacturing process technology and general high-end performance.

Otellini and Smith should be licking their chops and laying out a plan for resuming the consistent 59%-60% gross margins of the Pentium II halcyon days -- not putting up weak support for a meek outlook.

The combined 23% share price drop in this young year is harsh indeed, bringing the stock back within shouting distance of 52-week lows and close to the lowest prices seen in the past five years. Intel stock is slightly cheaper now than it was when our Motley Fool Inside Value team said that it was an outstanding value.

So is it an even better buy these days, or are we dealing with damaged goods? I would say it's the former because the chip market does look healthy, and memory represents no more than 5% of Intel's total revenues. IBM's market hints still look fairly dependable, in other words.

But maybe the skeletons in Intel's closet are so scary that the price drop is warranted or even too generous.

Find out what our top value hounds think about all this with a free 30-day trial pass to Inside Value. Me, I'm staying on the sidelines and sticking with AMD, whose shares I'd buy at several times today's prices. We'll see tomorrow night how that theory is working out.

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Fool contributor Anders Bylund is an AMD shareholder, but holds no position in any other company discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is here to ensure that you get all the material knowledge you deserve.