Given a scarcity of key economic data and earning releases this week,
Intel's mid-quarter update on Thursday could take center stage. Last week,
schizophrenia seemed to spread among analysts who touted the chip sector one
day only to bash it the next. On Monday, Lehman Brothers upgraded
semiconductors to "positive" from "neutral," citing expectations of inventory
restocking, while on Tuesday, J.P. Morgan raised the group to "bullish" from
"neutral," due to signs that gross margins, utilization rates, earnings
estimates and year-on-year growth rates are bottoming. However, on Thursday,
J.P Morgan trimmed its first-quarter revenue estimates on Intel, saying that
following a trip to Asia, it found signs that the PC food chain was being hurt
by shortages of Intel components. Also in Asia, Smith Barney noted that chip
inventories were very low, that order trends were improving, especially in
analog, and that market demand was largely seasonal with concerns focused on
PC demand. Also on the sunny side, Prudential raised its first-quarter
revenue target on Intel, expecting the chip giant to narrow its revenue
guidance around the upper half of its initial range. The broker also raised
its gross margin forecast for the period. Meanwhile, Goldman Sachs observed
that January semiconductor sales dropped 12.8% from the prior month. Goldman
expects year-on-year pricing momentum to decline in February due to tougher
comps, softer industry supply demand and recent memory price cuts. "We expect
[year-on-year] unit growth to remain moderate (mid single digits) throughout
2005, and believe the best idea now is to position for a potential analog
rebound," concluded the broker. In sum, opinions are all over the map, and
investors might have much sorting out to do before making their bets this
week, or amid the uncertainty, may decide to do nothing at all.
High-Tech Monday Update is provided courtesy of Thomson Financial. This
information is believed to be true and accurate; we take no responsibility for
inaccurate information and reserve the right to update our reports. For more
information, please visit our web site at http://www.thomson.com/financial.
SOURCE Thomson Financial Corporate Group
back to top
