Some more great reporting. How can you "slash" estimates by a penny a share?
Prudential trims Intel, AMD earnings
By Deborah Adamson, CBS.MarketWatch.com
Last Update: 11:25 AM ET Aug. 28, 2002
NEW YORK (CBS.MW) -- Prudential Financial slashed fourth-quarter earnings estimates Wednesday for chipmaker rivals Intel and AMD after a check in the Taiwanese supply chain pointed to slower growth.
Shares of industry leader Intel (INTC: news, chart, profile) fell by 22 cents, or 1.2 percent, to $16.96 while Advanced Micro Devices (AMD: news, chart, profile) gave up 36 cents, or 4 percent, to $8.73.
Analyst Hans Mosesmann said demand patterns in the personal computer supply chain in Taiwan suggest that Intel likely won't see more than 10 percent sequential growth in the fourth quarter. Taiwan is a major contract manufacturer of PCs; decreased demand for computers means fewer orders for chips.
Also, "back to school has been muted and the Taiwanese foundries' increased cautiousness are indicators of a more gradual pickup in the second half of 2002, below seasonal patterns," he told clients.
As such, Mosesmann cut his fiscal 2002 earnings estimates for Intel by a penny to 53 cents a share. Wall Street analysts expect a 55-cent profit on average, according to Thomson Financial/First Call.
However, the analyst maintained his outlook of 4.4 percent growth in the third quarter and kept his "buy" rating on the stock. The analyst also left his 2003 earnings estimates untouched at 82 cents -- 3 cents higher than what Wall Street expects.
"We reiterate our 'buy' rating on good prospects for a 2003 corporate upgrade cycle and execution on all fronts by the company," the analyst wrote in his research report.
Mosesmann has a $25 price target for the stock.
As for rival AMD, the analyst sees much of the same business conditions afflicting the chipmaker.
However, he sees AMD's third-quarter processor sales to come in flat sequentially rather than the expectation of modest growth.
He also noted that AMD's continued market shares losses through the end of the year will exacerbate the situation of a weaker outlook.
The analyst cut his fiscal 2002 loss estimate for AMD to $1.56, down from a loss of $1.45. For next year, Mosesmann slashed his expectation to a loss of 10 cents, down from breakeven. The Street is expecting a loss of $1.42 for this year and a loss of 58 cents in 2003.
However, Mosesmann kept his 'buy' rating on the stock "on good prospects for AMD's Hammer processor in 2003."
His price target for AMD is $12.
Deborah Adamson is a reporter for CBS.MarketWatch.com in Los Angeles. |
