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Intel's Q1 to offer few surprises say analysts

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CIOL Bureau
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Duncan Martell

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SAN FRANCISCO: Intel Corp., when it issues its mid-quarter update on

Thursday, won't drop any surprises on investors, and the world's largest

chipmaker will likely say its quarter is on track with the guidance it gave in

mid-January, analysts said.

Intel, based in Santa Clara, California, in January had forecast

first-quarter revenue of $6.4 billion to $7.0 billion, which would be flat to

down as much as 8.3 per cent from the fourth-quarter's $6.98 billion.

With less than a month to go in the quarter, most analysts expect Intel to

post revenue in the middle of that range, around $6.7 billion, with a few

expecting revenue at the higher end. Revenue in the first quarter typically is

little changed or down 2 per cent or less from the December quarter.

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"The personal computer industry, in my view, seems to be hanging in

there pretty well but at the same time it doesn't seem to be terribly healthy in

terms of growth," said Dan Scovel, an analyst at Needham & Co.

That view sums up what should be a no-surprises quarter for Intel, whose

Pentium microprocessors power roughly 80 per cent of the world's PCs. Intel will

issue a news release on Thursday and hold a brief conference call with analysts,

led by its chief financial officer, Andy Bryant.

But there aren't high expectations for the first half of 2002, anyway, as

Intel, PC makers and Microsoft Corp. don't expect any significant boost in sales

until the second half of the year. Microsoft has said it sees PC sales falling

at a mid-single-digit percentage rate in the first half.

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Analysts expect Intel to earn 12 cents to 16 cents a share, with a mean

forecast of 14 cents, according to Thomson Financial/First Call. Revenue is

pegged at $6.7 billion.

No likely change in gross margin forecast



Intel will likely narrow the range of its revenue guidance and make no
change in its forecast for gross margin per centage of 50 per cent, plus or

minus a couple of points, wrote Dan Niles, a Lehman Brothers analyst in a note

to clients.

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Intel shares rose 87 cents to close at $31.85 on the Nasdaq on Monday. The

stock is little changed so far this year, rising 1.3 per cent, compared with a

0.50 per cent increase in the Standard & Poor's 500 Index.

Niles expects the range to be narrowed to $6.6 billion to $6.7 billion, with

little likelihood of posting revenue toward the higher end of its guidance.

"Given Intel entered the quarter with a backlog that indicated that

revenues could in fact increase (over the fourth quarter), we view the removal

of the high-end of the range as a blow to those who were counting on Intel

exceeding expectations for the quarter," Niles wrote.

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Others are expecting a bit more oomph from the first quarter. "They'll

probably guide to the upper half of the range they gave," Scovel said.

"The reason is that they kind of padded the (first) quarter in my view,

because of the wide revenue range they gave."

Scovel expects earnings per share of 15 cents and revenue of $6.9 billion.

Banc of America Securities analyst Doug Lee is forecasting earnings per share of

14 cents and sales of $6.7 billion.

In the year-ago quarter, Intel reported profit, excluding acquisition-related

costs, of $1.1 billion, or 16 cents a share. Including those costs,

first-quarter net income was $485 million, or 7 cents a share, on sales of $6.7

billion.

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