The personal computer segment is seeing weak demand
and the Street expects the sluggishness to continue. This has led to Intel
Corporation(NASDAQ:INTC) estimates being trimmed.
For instance, Citigroup's Glen Yeung lowered his
expectations for the company's fourth quarter results on Thursday.
When announcing the results for the third quarter, the
chipmaker had forecast a 0.7 percent revenue growth sequentially, well below
the seasonal growth of 3.2 percent in that quarter.
Yeung has however cut his estimates to the lower end
of Intel's forecast range and well below the consensus estimates. According to
him “Notebook ODM data has been noticeably weak, down 5 percent
month-over-month in October (vs. expectations flat-to-up) and likely down again
in November.”
According to Yeung's estimates, Intel's ODM notebook
shipments in the fourth quarter will be down 2 to 5 percent sequentially, with
the company getting very little support from Windows 8 notebooks, since there
is weak demand for current touch models.
Intel shares have slid about 14 percent since
September 2, while the benchmark S&P 500 has risen 1 percent.
James Covello of Goldman Sachs slashed his target
price for Intel to $16 from $20, having already had a Sell rating on the stock.
According to Covello, the company's gross margins are
likely to come under pressure due to excess supply. Both Intel and Advanced
Micro devices have an inventory backlog while Intel is also adding to capacity.
All this will put a downward pressure on chip prices.
Covello now sees 2013 profits of $1.60 a share, down
from $1.70; for 2014, he goes to $1.90, from $2.05.
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