Intel seen missing second-quarter revenue record
Thursday July 8, 11:44 am ET
By Daniel Sorid
SAN FRANCISCO, July 8 (Reuters) - Intel Corp. (NasdaqNM:INTC - News) investors might be elated if the world's largest chip maker hits or beats its quarterly revenue target next week, but Chief Executive Craig Barrett might be let down.
Barrett has said he wants to lead Intel through quarterly revenue records before his planned retirement next May. But the analysts' average estimate of $8.09 billion in sales falls more than $200 million short of Intel's best-ever second quarter in 2000 -- the tail end of the dot-com boom -- when revenue reached $8.3 billion.
That doesn't mean Intel's business lacks momentum now. Data from Taiwan on notebook computers show demand is picking up and inventories have been falling, analysts said.
Intel also has a fresh line-up of semiconductors to power notebooks, desktop PCs and servers, and it says its memory chip business was especially strong in the second quarter.
Those new products could stimulate demand for PCs and servers in the second half of 2004, analyst David Wong of A.G. Edwards & Sons Inc. wrote in a recent note to clients.
Analysts view Intel's latest second-quarter financial outlook as virtually in the bag. The company's last update on June 3, calling for revenue of $8 billion to $8.2 billion, came only a few weeks before the end of its quarter, leaving little room for disappointment.
But not a single Wall Street analyst expects Intel to top its own revenue forecast when it reports results on Tuesday, according to Reuters Estimates. The most optimistic of the 23 revenue outlooks is $8.2 billion.
Lehman Brothers analyst Tim Luke wrote in a recent research note that he expects Intel to deliver solid second-quarter results. He warned, however, that the real concerns were over the third quarter, when "more measured" demand and a production glitch in a recent chip could catch up to the company.
A LIFT OF ITS OWN
Intel's rival and Silicon Valley neighbor, Advanced Micro Devices Inc. (NYSE:AMD - News), plans to post its quarterly results on Wednesday. The Sunnyvale, California-based company could get a boost from Opteron, its year-old line of chips for server computers used by businesses, analysts said.
Analyst Tai Nguyen of Susquehanna Financial Group estimated that AMD shipped about 100,000 Opteron processors in the second quarter, up 67 percent from 60,000 in the first quarter.
Still, Nguyen said AMD seems to be losing some memory chip business to Intel, although it should see growth this year in revenue from flash memory because of healthy demand for cellular phones and other electronics.
In early June, AMD Chief Financial Officer Robert Rivet told investors the company was gaining market share against Intel, and its quarter appeared to be "seasonally normal." Analysts expect AMD to post $1.24 billion in revenue in the second quarter, about the same as in the first quarter.
The second quarter historically has been the weakest of the year for chip makers, lacking both holiday-driven spending by consumers and end-of-year and beginning-of-year spending by companies.
Amid a rapid industry recovery, Wall Street had become used to the chip industry outperforming seasonal patterns in the past several quarters. But that upswing led investors to a letdown as PC chip makers' own forecasts for the year have not been as strong, said analyst Shane Rau of Framingham, Massachusetts-based market research firm IDC.
"I think the financial markets were anticipating a much better result than actually occurred," Rau said. |
