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sharetips333
Stop trying to spook the Windows fanbois. They’ll go crazy about hearing that ...
Tunrayo
I totally agree, Charles. I don't see PC sales slowing down significantly. For ...
Analyst: PC orders 'falling off a cliff'
Dylan McGrath
8/10/2010 10:32 AM EDT
SAN FRANCISCO—A Wall Street analyst lowered 2010 revenue and earnings estimates for Intel Corp. Tuesday (Aug. 10), saying checks in the Taiwan PC supply chain indicated that order rates from the PC end market deteriorated sharply during the last part of July.
"We believe a host of PC companies pushed out orders throughout the supply chain," wrote Christopher Danely, an analyst with J.P. Morgan, in a report. Danely said checks indicated that Hewlett Packard Co. (HP) and Acer Inc. cut orders to the notebook supply chain, while both HP and Lenovo Group Ltd. cut orders to the semiconductor supply chain.
The PC end market is the single largest end market for semiconductors at roughly 40 percent of total semiconductor revenue, according to Danely.
Danely cut J.P. Morgan's estimate for Intel's 2010 revenue to $44.1 billion from $44.4 billion and cut its 2010 earnings estimate for the leading chip vendor to $1.95 per share from $2.01 per share. Danely did not lower the firms estimates for 2011 and reiterated a "neutral" rating on Intel stock.
"Although there is a possibility order rates could recover, we view this as unlikely given increased inventory in the supply chain and weakening demand in the U.S. and Europe and slowing demand in China," Danely said.
With roughly 94 percent of its revenues derived from the overall computing end market, Intel (Santa Clara, Calif.) is highly exposed to the prevailing PC demand headwinds in Asia, according to Danely.
Although J.P. Morgan's research did not uncover any decline in order rates in other end markets, Danley said he expects the weakness to show up in every end market for semiconductors, as is typical in a downturn.
"We continue to be cautious on the space due to the large amount of capacity coming on line combined with softening demand," Danely wrote.
The stocks of Intel and rival Advanced Micro Devices Inc. (AMD)—as well as other chip vendors—closed lower Tuesday, partially as the result of Danely's report. Intel declined 4 percent to close at $19.82 and AMD declined nearly 8 percent to close at $6.83.
"We believe a host of PC companies pushed out orders throughout the supply chain," wrote Christopher Danely, an analyst with J.P. Morgan, in a report. Danely said checks indicated that Hewlett Packard Co. (HP) and Acer Inc. cut orders to the notebook supply chain, while both HP and Lenovo Group Ltd. cut orders to the semiconductor supply chain.
The PC end market is the single largest end market for semiconductors at roughly 40 percent of total semiconductor revenue, according to Danely.
Danely cut J.P. Morgan's estimate for Intel's 2010 revenue to $44.1 billion from $44.4 billion and cut its 2010 earnings estimate for the leading chip vendor to $1.95 per share from $2.01 per share. Danely did not lower the firms estimates for 2011 and reiterated a "neutral" rating on Intel stock.
"Although there is a possibility order rates could recover, we view this as unlikely given increased inventory in the supply chain and weakening demand in the U.S. and Europe and slowing demand in China," Danely said.
With roughly 94 percent of its revenues derived from the overall computing end market, Intel (Santa Clara, Calif.) is highly exposed to the prevailing PC demand headwinds in Asia, according to Danely.
Although J.P. Morgan's research did not uncover any decline in order rates in other end markets, Danley said he expects the weakness to show up in every end market for semiconductors, as is typical in a downturn.
"We continue to be cautious on the space due to the large amount of capacity coming on line combined with softening demand," Danely wrote.
The stocks of Intel and rival Advanced Micro Devices Inc. (AMD)—as well as other chip vendors—closed lower Tuesday, partially as the result of Danely's report. Intel declined 4 percent to close at $19.82 and AMD declined nearly 8 percent to close at $6.83.
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Dave.Dykstra
8/10/2010 12:55 PM EDT
This will be very interesting to all of us to watch closely as it plays out in the coming weeks. Is this a precursor or a short term event? A number of economic factors indicate that softening demand should have been anticipated, but it does not appear to be be clear yet if that will continue or demand will return. At this point, "back to school" product should already be on the shelves, so we should be looking toward the lead in to the holiday buying season.
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Frank Eory
8/10/2010 1:35 PM EDT
Did we really go from boom to bust just in the month of July? The wild gyrations in semiconductor market predictions lately are enough to make one's head spin -- and enough to make one wonder if any of these so-called analysts have a clue.
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sharetips333
9/6/2010 5:01 AM EDT
Stop trying to spook the Windows fanbois. They’ll go crazy about hearing that the Windows desktop world is about to take a major hit. Some people seem think the only way to get any work done is with a Windows PC. How’s that for being brainwashed by the Bill Gates era? Don’t get me wrong. I think that Windows desktops are still useful. I’m only saying that not everyone in the world needs one sitting on their desk to complete tasks. Most employees could easily go back to non-Windows desktop terminals and not even notice the difference and eliminate tens of thousands of Windows licenses in the process.
http://www.sharetipsexpert.com
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phoenixdave
8/10/2010 1:48 PM EDT
So do your think this indicates an overall pessimistic PC outlook for the upcoming holiday season, or a "cautionary pause" and "wait-and-see" approach? We are now in the "back to school" buying season, which should last for the next few weeks as the various educational systems ramp up for the Fall Semester. If the "back to school season" is soft, does this historically point to a soft holiday season?
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carlmuck
8/10/2010 3:16 PM EDT
The reported findings of the JPM "study" are checks of Taiwanese manufacturers. Is is possible that companies are taking their orders elsewhere? Vietnam is coming on line, Foxconn just announced start of manufacturing for HPQ in Turkey. Foxconn has a new factory in China coming online.
Further reason to doubt the story is the FT story from yesterday:
http://blogs.ft.com/beyond-brics/2010/08/09/taiwan-no-time-for-slowdown-as-hi-tech-exports-speed-up/
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selinz
8/10/2010 4:41 PM EDT
Rags to riches to rags in a month. That's funny! I must admit that I have little motivation to upgrade my PCs (if you count the two in the garage, the count is currently 8)... There's not really anything that makes me want to jump up and down. I WANT to want a tablet. But my notebook sits on my lap and I don't have to hold up the screen. And I can type. And.... Well, perhaps I will find a good reason to want one... I supposed that if I decide that my PS3 doesn't meet my enterainment requirements, I could talk myself into getting a media pc. Oh, that's right. Already have one... But do I really want to wait minutes to boot up to watch another episode of Lost? I'm thinking that every desktop in my house will eventually get replaced with a laptop. And the fact that you can get full featured laptops for $260 at Fry's (although I would generally not opt for the bottom price point). I expect the rest of the world may not be so saturated with computers. So this bodes well for Microsoft, Intel, and... Uhhh... Seagate?
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Leowise2010
8/10/2010 7:46 PM EDT
I always take ANY investor analyst recommendations with a huge grain of salt, reason? They all have "an ax to grind", we all have to remember that these poeple ara "mouth pices" for the "smart money" crowd! For all that you know, JP Morgan is sitting on the short side of a trade, and they need to shake and rattle the market! So, we are all well adviced to keep the salt shaker handy!
Leowise
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Simon7382
8/11/2010 2:48 AM EDT
Very good point. This analysis seems to be standing on shaky legs.
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RogerMel
8/10/2010 11:17 PM EDT
Danely cut J.P. Morgan's estimate for Intel's 2010 revenue to $44.1 billion from $44.4 billion..........so precise!!!
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dylan.mcgrath
8/11/2010 1:06 PM EDT
@RogerMe- the size of the estimate cut made me do a double take at first, too, but, hey, that's $300 million. It seems like chump change in the scheme of Intel's run rate, but that is some serious money.
@CarlMuck- you make a good point that the scope of the investigation done by the analyst is limited to Taiwan and he makes no claim otherwise. I don't know that the PC building industry in any other geography is large enough to offset declining orders in Taiwan, though.
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goafrit
8/12/2010 7:39 AM EDT
Unfortunately, I do not put a lot of emphasis on these analysts. They rarely get anything right. From mortgage to PC market, forget them. This is not science and it remains a guess work. Analyst depend on numbers which in most cases are not even reliable. However, it makes sense as the recession seems to be coming back.
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ash9
8/12/2010 8:48 AM EDT
Aug. 24 at the Hot Chips conference
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Jimelectr
8/13/2010 1:19 AM EDT
Slowdown, what slowdown? This is the first time in the almost 4 and a half years I've been at a semiconductor company that I've seen foundries at capacity. The fab cycle has lengthened from 6 weeks to 8 or 9 weeks. There's no slowdown where I work (Broadcom).
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Charles.Desassure
8/14/2010 8:35 PM EDT
Wait a minute. We are just getting over a bad recession and we expect the supply and demand for the PC market to remain the same. I hope this is a joke! I have to buy a lot of PCs this holiday season for my teenage family members that are now growing up. From my point of view, I think the PC market is during just fine. Based on my resources, I don't see a slowdown at all.
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Tunrayo
8/24/2010 2:39 PM EDT
I totally agree, Charles. I don't see PC sales slowing down significantly. For one, PCs are at cheapest prices ever - and there is still a huge market out there.
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LarryM99
8/16/2010 12:59 PM EDT
A lot depends on how narrowly you define the PC market. My smartphone is a portable PC that communicates on cellular networks. Tablets are pretty much the same thing but bigger and may not have cell comms. I have a couple of PC boxes in my house that are really set-top boxes, and if my Ceton card ever gets here then they will suck all the the functionality of the cable company STBs into them.
Even "traditional" PC boxes are changing. SSD's are already 2X the speed of spinning-disk drives, and PCIe interfaces multiply that by another 4X. I am holding off replacing my old laptop until I can get something with an SSD boot drive and a terabyte or so data drive.
This is going to be an interesting year...
Larry M.
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Peter.Ting
8/19/2010 7:11 PM EDT
Could the fact that Sandy Bridge will arrive late 2010 to early 2011 impact current orders ? This is a major product transition for Intel that combines GPU and memory controller along with the CPU at 32nm.
http://www.zdnet.com/blog/computers/intel-ramping-up-production-of-new-sandy-bridge-cpus/3274
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