 |
 |
|
|
|
|
||||||||||||||||||||||||||||||
|
All eyes on Intel
NEW YORK (CNNfn) -- Executives of Intel Corp. will give Wall Street its first glimpse at how the company's second-quarter has been shaping during a mid-quarter financial teleconference Thursday, and many analysts already have braced for a less optimistic sales forecast. Intel (INTC: Research, Estimates) is the largest supplier of PC microprocessors, garnering more than 80 percent of the global market share. The company also makes flash memory and embedded chips for communications and industrial equipment. The Santa Clara, Calif.-based company, considered by many to be a bellwether for both the semiconductor and PC industries, will host its teleconference beginning at 5:30 p.m. ET. When Intel reported its first-quarter results in April, executives told analysts to expect second-quarter sales ranging between $6.2 billion and $6.8 billion. Prior to that, expectations had been for sales closer to $6.9 billion. While not providing a specific earnings per share forecast, executives did say they expect the company's gross margin, the percentage of sales remaining after subtracting product costs, will slip in the second quarter to about 49 percent from 51.7 percent in the first quarter.
The current consensus estimate of analysts polled by First Call is for Intel to log a second-quarter profit of 11 cents per share on sales of roughly $6.3 billion. That compares with a profit of 50 cents per share on $8.3 billion in sales during the second quarter of 2000. But analysts have been adjusting their estimates recently, and this week several ratcheted down their expectations for Intel's top line. Intel's core microprocessor business has been hurt by a sharp drop in demand for PCs, especially in the United States, which resulted in a glut of inventory in the electronics supply chain. Although Intel executives recently have said they see signs of stabilization in that business, some are questioning just how stable it really is. On Wednesday, Merrill Lynch analyst Joe Osha said he expects Intel's revenue in the first quarter to come in below the low end of the company's forecasted range. "The rate of decline for both the flash memory and communications business in the second quarter could be more dramatic than the overall top line, leaving it to the microprocessor business to pick up the slack," Osha said in a note to clients Wednesday. Specifically, Osha said Intel's second-quarter microprocessor sales would have to show a 5 percent or less decline from the first quarter. "We don't think that's likely – our own model shows a 10 percent decline," he said. Osha also said his firm's surveys indicate that inventory levels are higher than recently thought. Credit Suisse First Boston analyst Charlie Glavin said Wednesday he expects Intel will tell the Street to expect revenue nearer the low end of its forecasted range. "We are not changing our estimates today, but do expect to have to lower them again after the call -- both for the second and third quarter," Glavin said. "Aggressive pricing and weak demand should mean mid-40 percent gross margins by the third quarter." Earlier in the week, Bear Stearns analyst Charles Boucher cut his earnings estimates on Intel to reflect weaker than expected PC demand as well as Intel's recent aggressive price cuts.
Goldman Sachs analyst Terry Ragsdale also raised a red flag on Intel's second quarter this week, saying, "We don't see how the news can be good." On top of the sluggish demand for PCs, Intel also has been facing increased competitive pressures from top rival Advanced Micro Devices (AMD: Research, Estimates). Although executives at Intel have shrugged off suggestions that they are engaged in a price war with AMD, a quick look at the latest prices on its flagship Pentium 4 chips compared with where they were priced when first introduced in November puts the magnitude of their recent price cuts into perspective. In April, Intel rolled out its fastest Pentium 4, operating at 1.7 gigahertz, priced at $352. When the company introduced the Pentium 4 in November, its 1.4 GHz and 1.5 GHz versions were priced at $644 and $819, respectively. Intel most recently listed the 1.4 GHz Pentium 4 at $193 and the 1.5 GHz version at $256. An Intel spokesman said this week the price reductions can be attributed to more efficient volume production of the chips. Executives at AMD, whose "Athlon" line of microprocessors have been chipping away at Intel's market share, have vowed to keep pace with whatever pricing moves its larger, deep-pocketed rival might make. "We'll buttress ourselves against any foolish moves by our competitor," Jerry Sanders, the company's chief executive, told analysts in April, promising to match Intel's prices "clock cycle by clock cycle."
|
|
|
|
|
||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||
| Back to the top | |
© 2003 Cable News Network LP, LLLP.
A Time Warner Company. All Rights Reserved. Terms under which this service is provided to you. Read our privacy guidelines. Contact us. |
