Semiconductors . . . Wedbush Morgan upgraded Intel to Buy from Hold, saying 3 consecutive qtrs of better-than-seasonal demand is a trend. The firm says the company's mid-quarter update was a positive surprise considering: 1) the negative effects of SARS in Asia, 2) poor economic conditions in Europe and Japan, and 3) very conservative IT spending by U. S.-based Fortune 1000 companies; also, the new and quite narrow rev guidance of $6.7 billion is very encouraging considering that the June qtr is typically a back-end loaded quarter. Price target is $28.
Intel is set to introduce one more 800MHz FSB-based P4 processor priced at $637, running at 3.2GHz, on June 23. Intel will maintain stable pricing for its P4 products through 3rd quarter, with the next round of price cuts scheduled for October 26.
Intel tightened revenue guidance for 2nd quarter 2003 to $6.6-$6.8 billion from prior guidance of $6.4-$7.0 billion, leaving the midpoint of guidance unchanged at $6.7 billion (down 0.8% Quarter over Quarter). This is higher than our expectations, as analysts expected Intel to lower the mid-point to $6.6 billion (down 2.2% Quarter over Quarter). Consensus was also generally for a lower mid-point. Intel noted that the architecture business (microprocessors, chipsets, motherboards) is trending to the high-end of normal seasonality. While it gave no details on the call, the upside in revenue guidance is almost entirely due to better-than-expected ASPs across the board, and, to a very small extent, better-than-expected unit shipments in notebook processors. Apart from Intel's mid-point of guidance being higher than our expectations, the call provided few insights. Analysts are raising 2nd quarter 2003 revenue estimate from $6.45 billion to $6.6 billion, at the low-end of Intel's revised guidance range, and EPS estimate from $0.11 to $0.12. 2003 EPS estimate is adjusted from $0.57 to $0.59.
Maxim issued revenue guidance for its June-ending 4th quarter. The company is guiding for revenues of $295 million and EPS of $0.24, which is exactly in line with estimates. While the guidance is likely to be viewed as disappointing, we believe that bookings for high performance analog products, while cooling slightly from strong March quarter levels, have remained healthy YTD for the sector as a whole, driven by a broad base of end markets. The company could be conservatively running its business in a limited visibility environment. Analysts are leaving estimates unchanged at $0.92 for F03 and $1.23 for F04. At a premium valuation of nearly 30x our 2004 EPS, upside is limited from current prices. In our view, however, Maxim remains a well run company with a defensible business model, capable of sustaining high levels of profitability.
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