This may be it:
=DJ Intel Seen Narrowing 2Q Rev Range, PC Demand Not As Good
06/03/2004
Dow Jones News Services
(Copyright © 2004 Dow Jones & Company, Inc.)
By Donna Fuscaldo
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Chip giant Intel Corp. (INTC) is expected to narrow its revenue range for the second quarter when it hosts a mid-quarter update after the close of trading Thursday.
Going into the June quarter, typically a slow three-month period for Intel, optimism abounded that demand for PCs was tracking better than the seasonal norms.
That optimism, however, has tempered, leaving some Wall Street watchers to predict the world's largest chip maker will tighten its revenue range for the June quarter.
"We had previously expected sales to track better than seasonally," but unit demand data so far doesn't support the higher numbers, wrote Merrill Lynch analyst Joseph Osha in a research report.
Osha, who is calling for Intel to target revenue between $7.8 billion and $8 billion, narrower than the company's past range of $7.6 billion to $8.2 billion, said notebook inventory during the June quarter has been worked off.
Analysts, according to Thomson First Call, have Intel weighing in with revenue of $7.98 billion in the second quarter and earnings of 25 cents a share. In the year-ago second quarter, Intel reported revenue of $6.8 billion and earnings of 14 cents a share.
While Osha said he is concerned about how PC demand tracked in the second quarter, he isn't worried about Intel meeting its gross margin target. When Intel reported first-quarter results, it forecast gross margins of 60% plus or minus a couple of points. Osha is maintaining his gross margin estimate at 61.5%, noting that Intel is attempting to keep inventories from rising and isn't being hurt by price cuts.
Michael McConnell, an analyst at Pacific Crest Securities, said the typical slowdown in demand for desktop computers during the second quarter will limit the upside to Intel's numbers. Exacerbating that, said the analyst, is the fact that most of Intel's sales in the second quarter come at the end of the quarter. He noted that the launch of Intel's newest chip, Grantsdale, later this month, has resulted in some customers delaying purchases.
McConnell, who is calling for Intel to tighten its revenue range to between $7.9 billion and $8.1 billion, said the company will talk about the stabilization of notebook sales and gains in market share in the flash memory chip market.
Merrill's Osha and Pacific Crest's McConnell do not own shares of Intel, but Merrill intends to seek an investment banking relationship with the chip maker. Pacific Crest does not have a banking relationship with the company.
Officials at Intel weren't immediately available to comment.
Shares of Intel were recently down 45 cents, or 1.6%, to $27.56, on Nasdaq volume of 19.6 million, compared with average daily volume of 66.4 million.
-By Donna Fuscaldo, Dow Jones Newswires; 201-938-5253; donna.fuscaldo@dowjones.com
(END) Dow Jones Newswires |
