MANHASSET, N.Y. Stabilizing unit demand and pricing and the burn-off of accumulated inventory could mean improved year-end results for beleaguered microprocessor supplier Intel Corp., according to a report by FBR Equity Research.
The firm raised its third-quarter guidance for Intel to earn 17 cents per share, on revenue of $8.6 million. For 2006, FBR expects Intel to earn 78 cents per share on sales of $35.0 billion, up from 74 cents per share on sales of $34.8 billion previously.
FBR also raised its 2007 estimates for Intel, projecting earnings of $1.06 per share on sales of $38.3 billion, up from 94 cents per share on sales of $37.3 billion previously.
The firm noted that while July motherboard builds came in weaker than expected, more seasonal growth pattern was likely for August and September, with notebook demand in line for a seasonal third quarter following a weak second quarter. In addition, the firm said initial forecasts call for better than seasonal growth25 to 30 percent in motherboards the fourth quarter.
According to FBR, Intel has largely burned off the excess inventories of P4 microprocessors that plagued the company earlier this year. In fact, P4 microprocessors could see spot shortages as demand is soaring following a round a price cuts in July.
FBR expects Intel's new sales management to take a firmer stand against price discounting, following the introductions of its Conroe and Woodcrest chips.
On the negative side, the firm said Intel continued to experience problems with the integrated graphics capabilities of its Broadwater G965 chipset launched in the second quarter, though a software patch is being released to fix these issues. In addition, FBR does not expect additional fallout from Dell's decision to use AMD processors in its desktop computers.