Nothing good happens in Q1. January through March are seasonally the weakest months of the year for PCs. But this year is especially weak. IDC reported Q1 PC shipments down 14% y/y, which is the steepest decline in the last 19 years and worse than IDC’s forecast of down 8%. Total Q1 PC shipments came in at 76mn. This data point is significant for Intel Corporation (NASDAQ:INTC) because Core notebooks today account for 1/3rd of total sales and almost half of earnings per share.

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Intel Corporation (NASDAQ:INTC) likely recognizes this pattern and into earnings, analysts at Nomura believe, will stay cautiously optimistic on 2013, highlighting a greater mix of touchenabled ultrabooks, lower price points ($499), and the launch of Haswell processors. However, most PC OEMs are not citing the lack of touch-capability as the reason for weak PC sales.

Assuming a seasonal Q2 (flat to up slightly), the research firm estimate that PC shipments would have to grow 20% q/q in both Q3 and in Q4 for PCs to stay flat yoy (350m). Analysts are maintaining their Q2 and full-year CY13 EPS estimates of $0.36 and $1.75 versus consensus of $0.41 and $1.91, respectively.

While subdued PC demand is leading some investors to believe Intel Corporation (NASDAQ:INTC) may reduce capex, the firm continue to believe Intel Corporation (NASDAQ:INTC) decision to spend $13bn is largely independent of PC demand. The upcoming Haswell processors reduce power consumption to 7-10W, but Intel Corporation (NASDAQ:INTC) will likely need one more node transition (14nm Broadwell) to bring Core to tablets.

Nomura’s price target for Intel Corporation (INTC) of $18 is based on 10x CY13E EPS.

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