Earnings Preview: Intel

by: theflyonthewall.com October 14, 2008 | about stocks: INTC    

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Intel (INTC) is expected to report Q3 earnings Tuesday Oct 14 after market close,  with a conference call scheduled for 5:30 pm ET.

Guidance

The consensus estimate is 34c for EPS and $10.26B for revenue, according to First Call.

Analyst Views

Intel's report is expected to shed more light on what analysts see as a weakening technology market. The shares are trading near its historical troughs largely due to macroeconomic concerns. Intel also has been hurt by industry trends. Like other chip-makers, the company has reeled from a glut in memory products that has led to declines in average selling prices.

Friedman Billings believes Intel's Q3 revenues tracked near the midpoint of the company's revenue guidance range of $10.0B to $10.6B, but not much better. Friedman said it heard that customers were 'double-booking' on Intel's low-end Atom processor, introduced in March, likely pulling in Q4 demand in order to offset Atom parts shortages. Friedman Billings is slightly below the Street for Q3 revenues. Specifically, it forecast sales of $10.2B and EPS of 34c.

Ashok Kumar of Collins Stewart told clients in a research note that, "With demand weakening toward the end of the September quarter, he expects Intel to report revenue toward the low end of guidance range." Also, last Friday, analyst Vijay Rakesh of ThinkPanmure downgraded Intel to a sell saying the company is "heading into a perfect storm in 2009, with some of the prior growth drivers fading and multiple macro and company-specific headwinds, which imply a slowdown in its growth and multiple contraction, well below current consensus Street estimates."

Wedbush, due to limited visibility, expects management to give conservative Q4 guidance. The firm is modeling Q4 revenues and EPS estimates of $10.59B and 36c, meaningfully below consensus of $10.8B and 39c. The firm's estimate of 4% growth is noticeably below the 10-year average of up 9%. Wedbush thinks there is risk to management's full year gross margin guidance of 57.0%. Looking ahead, Wedbush thinks ongoing reductions in cost structure could be weighed by an increasing mix of Atom, shift in demand profile to lower-end systems, 32nm start-up costs, and seasonality. 

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This article has 1 comment:

  •  
    Oct 14 03:55 PM
    Getting punished before the earnings, they'll probably pop it in after hours and try to use Intel to keep this rally going. We were off over 600 points off the high on the Dow, we'll likely see all these gains get pared as institutional investors begin to sell again.
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