It should have been posted before earnings but still worth reading based on comments from analysts.
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Intel Q3 On Tap: Wells, B. Riley See PC Lift
By Tiernan Ray
Shares of Intel (INTC) are up 87 cents, or 2.8%, at $32.34, in advance of the company’s Q3 earnings report this afternoon, after the closing bell.
The Street, on average, is modeling $14.45 billion in revenue for the three months ended in September, and 65 cents per share in net income.
Intel’s report comes after two days of heavy selling pressure on semi stocks, so it will be heavily watched, along with the report today as well of Linear Technology (LLTC), for any clues to the broader health of the chip industry.
B. Riley & Co.’s Craig Ellis, reiterating a Buy rating, and a $40 price target, expects a “solid” report, with reports from Taiwanese notebook computer makers showing upside, with “Sept sls updates confirm that since even without Pegatron’s +62% mm result (iPhone 6 benefit) the supply chain is up ~12.5%/~10.0% in Sept mm/3Q14 qq versus our +4.0 % PCG modeling.”
Year-over-year shipments for Intel’s PC group “could be below our -1.0% qq but dollars should be in-line/better.” He writes. There’s also “Modest upside to Data Center Group (DCG) ests are possible in both qtrs vs our +6.0%/+3.0% qq.”
“We expect to hear Consumer PC’s remain vulnerable to tablet/smartphone cannibalization but that corp PC’s and moreso servers are doing well.”
David Wong of Wells Fargo, who has an Outperform rating on Intel shares, also cites Taiwanese manufacturers’ data, which showed a rise in PC shipments in September:
PC builds rose in the month of September. Sales for our Taiwanese notebook ODM aggregate increased 15% month over month in September after increasing 3% month over month in August and decreasing 2% month over month in July. Sales for our motherboard aggregate (Asustek, Elitegroup, ASROCK, Microstar and Gigabyte) increased 3% month over month in the month September, if we exclude Pegatron which showed a particular big jump in sales in September due in part, we believe, to business related to the Apple iPhone. There was a clear seasonal lift in PC builds for the September quarter as a whole [...] PC shipments appear to be running at close to flattish year-over-year growth [...] September 2014 quarter sales for our Taiwanese notebook ODM composite increased 9% year over year, representing an improvement from a 5% yr/yr increase in the June quarter.
Wong is looking forward to recently released chips from Intel that could stimulate PC demand:
We think new processor launches could help stimulate computer demand. In early September Intel launched its Grantley server processor platform, with new systems from various vendors available for immediate shipment. In early September Intel launched its 14nm Broadwell-Y (Core-M) processor family for 2-in-1 devices. Last week (October 9) Lenovo released its Yoga 3 Pro 2-in-1, which features an Intel Core M processor, with expected availability at the end of this month (October).
