Semis: Goldman Sees Weak Q2 Outlook on Wireless, Tablets
By Tiernan Ray
April 10, 2012, 12:03 P.M. ET
blogs.barrons.com
Goldman Sachs’s semiconductor analyst James Covello this morning warns Q1 results for chip makers will likely fall below the midpoint of most companies’ forecasts because the wireless equipment market is reducing inventories and because some tablet computer sales are not playing out as expected.
Covello’s evidence comes from some weakness cited by Altera ( ALTR) and Cavium ( CAVM), as well as Texas Instruments ( TXN), SanDisk ( SNDK) and Cypress Semiconductor ( CY).
The Q2 outlook will probably be “weak” as well, he thinks:
We believe semi companies will guide 2Q12 revenue up modestly qoq but below aggressive Street expectations. While our analysis shows that inventory should be healthy exiting 1Q12, sales are still muted as customers are being careful about rebuilding inventory. The Street is modeling 2Q12 semi sales up 7% qoq, ahead of typical seasonality of up 6%, and we expect out-quarter Street estimates for most companies to be trimmed. Our 2Q12 estimates are below the Street for INTC, AMD, and FSL. We expect NXPI and BRCM to buck the trend and beat and raise.
Covello, who is Neutral on the group overall, thinks there will be a strong recovery in semis in the second half of this year, through 2013, but he thinks the stocks will trend lower on the poor Q2 outlook. |
