Intel Corporation (INTC) Unlikely To Miss Estimates: Macquarie

Intel Corporation (INTC) Unlikely To Miss Estimates: Macquarie
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Though notebook and PC demands have been slowing this quarter, Intel Corporation (NASDAQ:INTC) is in line with its revenue guidance of $12.7 billion, says Macquarie Equity Research. Macquarie analyst Shawn Webster estimates the chip maker to earn 43 cents in the first quarter of this year, compared to the consensus of 42 cents.

Intel Corporation (INTC) Unlikely To Miss Estimates: Macquarie

Analysts said their checks have shown weak component orders quarter to date, particularly due to weaker desktop chip orders from Europe. Macquarie’s Taiwan-based analyst Andrew Chang said he has lowered his first quarter forecasts for notebook ODMs, though motherboard sales remains on expected lines.

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Then why do they expect Intel Corporation (NASDAQ:INTC) to perform better? Macquarie said there was a significant under-shipping in the third and fourth quarter of the last year that has created the biggest microprocessor inventory burn since the Credit Crisis. This inventory burn will allow Intel Corporation (NASDAQ:INTC) to ship at better than expected rates. Shawn Webster, senior analyst at Macquarie expects Intel’s second quarter growth to be 2 percent QoQ.

However, analysts are expecting a profit margin decline in the second quarter, while the second half of this year should see better margins due to improved revenues and lower factory costs.

Macquarie said that there will be a deficit in chip supply chain for the entire year if PC end market contracts by 1.3 percent YoY as estimated by IDC. Shawn Webster’s model shows that the supply chain microprocessor deficit will decline from 3.9 million in the fourth quarter of last year to 12.8 million in the fourth quarter of this year.

Intel Inventory

Webster further said that the current forecasts can easily accommodate the decline in PC market because of the significant inventory burn we are about to witness. Macquarie’s model estimates the second quarter revenue of $13 billion with $0.42 EPS.

Macquarie maintains its Outperform rating on Intel Corporation (NASDAQ:INTC) with $26.20 price target. Intel Corporation (NASDAQ:INTC) shares were down 0.16 percent to $21.34 at 11:14 AM EDT.

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