Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Chip Earnings Looking Chipper, Sterne Agee Says

Earnings season gets under way in earnest tomorrow when Intel reports its quarterly results. The world’s biggest chipmaker is one of the tech sector’s bellwethers, setting the tone not only for the PC sector, but also for much of tech in general.

It’s also the first of several chip stocks to report in the coming days. Sterne Agee analyst Vijay Rakesh summarized a few to watch in a research note to clients today.

Generally, he says to expect semiconductor companies to report results that range from in line with expectations to slightly up, and the outlook for the June quarter should improve.

One reason for that: PC sales estimates came in higher than expected from both Gartner and IDC last week. “We believe improving shipments were primarily a result of restocking rather than end-market demand. We believe both AMD and Intel should deliver in line to modestly better” results for the quarter ended March, he writes. Of the two, he says, AMD could deliver more upside on its results when it reports earnings on April 19 because its consensus estimates are low. Analysts expect it to report earnings of 9 cents a share on $1.56 billion in sales.

Intel, its strength already established, has higher expectations more consistent with its recent performance. The consensus of analysts calls for it to report 50 cents of per-share earnings on $12.84 billion in sales.

A supply chain disruption in hard drives that for a few months messed with the PC industry is coming to an end. But sales of Ultrabooks aren’t impressing anyone, Rakesh says. “Ultrabook sell-through is weak primarily on higher retail pricing versus mainstream notebooks. There are only 15 Ultrabooks on Best Buy versus 280 Notebooks listed,” he writes.

In the server space, Intel’s Romley chip is ramping up to full capacity, but he expects the competition from AMD to increase in coming months. One reason: AMD’s acquisition earlier this year of micro-server vendor SeaMicro.

One more chip company he likes among those reporting this week: Qualcomm. Rakesh says it has strong tailwinds, including Apple’s expected iPhone5, the latest iPad and wins with phones and tablets at Samsung.


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