Intel Seen Bullish in Mid-Quarter Update
Wednesday June 8, 4:46 pm ET
By Joe Bel Bruno, AP Business Writer
Intel Seen Bullish in Mid-Quarter Update As Semiconductor Stocks Surge Higher
NEW YORK (AP) -- Intel Corp., the world's largest maker of computer chips, is expected to hand Wall Street a bullish mid-quarter update on Thursday that analysts predict could demonstrate a revival in the slumping semiconductor industry.
Propelling that growth is expected to be a boom in popularity for notebook computers, which recently surpassed desktops in sales for the first time. Last week, securities firms UBS and JPMorgan Chase lifted their revenue and profit forecasts on Intel on expectations of strong notebook microprocessors sales and rising demand from Asia.
The sector also gained momentum on Wednesday after the Semiconductor Industry Association reversed previous pessimistic forecasts by reporting sales are expected to grow 6 percent to $226 billion this year. In November the SIA had projected that 2005 sales would be essentially flat with the $213 billion sales level of 2004. The report came one day after Texas Instruments Inc., the world's largest maker of chips that power mobile phones, raised guidance for the second quarter.
"Everyone has talked about the industry making a comeback, but I never really thought it was down to begin with," said Stephen Leeb, whose New York-based Leeb Capital Advisors manages some $110 million of assets. "There were certainly inventory issues. But, you had an absolutely blockbuster 2003 and in 2004 you saw reasonable growth -- if that's bad, then we'll take it."
Either way, Leeb said the market will be watching to see exactly where growth will be coming from. He expects Asia -- particularly demand in India and China -- will help push sales higher over the long-term.
Analysts also say they will be looking out for any further projections about Intel's deal with Apple Computers Inc. The two companies announced earlier this week that Intel would begin providing Apple with chips to power the iMac, ending a long-standing relationship the computer company had with International Business Machines Corp.
Intel told analysts during its first-quarter earnings conference call that it expects to report sales between $8.6 billion and $9.2 billion for the period. The company also plans to increase capital spending in 2005 to as much as $5.8 billion, up from a previous estimate of a high of $5.3 billion.
The company does not provide earnings per share guidance. On average, analysts surveyed by Thomson Financial expect earnings of 28 cents per share on revenue of $8.99 billion.
The mid-quarter update -- which will be delivered after the markets close -- is expected to heavily influence trading in technology stocks. Shares bounded higher on Wednesday ahead of the update, and also in reaction to strong comments made by Texas Instruments.
The Dallas-based company said during its mid-quarter update that it expects to generate revenue of $3.12 billion to $3.24 billion, or 27 cents to 30 cents per share, in the second quarter. Texas Instruments previously projected a revenue range of $3 billion to $3.24 billion, or 25 cents to 29 cents per share.
Shares of Texas Instruments rose 62 cents, or 2.2 percent, to close at $27.90 on the New York Stock Exchange. The stock's strength helped lift the Philadelphia Semiconductor Index, which tracks both large and small players within the industry, 0.65 to 267.3 points.
The Intel shares rose 24 cents to close at $27.10 on the Nasdaq. Advanced Micro Devices Inc. added 24 cents to close at $17.80 on the NYSE. Meanwhile, Analog Devices Inc. edged up 27 cents to close at $37.74 and STMicroelectronics NV shares climbed 47 cents, or 3 percent, to $16.01 on the NYSE.
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