RBC Capital Trims Intel Corporation (INTC) Q1 Estimates

Analysts at RBC Capital Markets lowered their estimates for Intel Corporation (NASDAQ:INTC) for the first quarter of the current fiscal year due to the on-going weak demand for personal computers (PCs) and elevated risks of sub-seasonal build.

RBC Capital Trims Intel Corporation (INTC) Q1 Estimates

RBC Capital Markets analyst, Doug Freedman opined that the introduction of Haswell will unlikely become a significant catalyst that could drive seasonal trends higher in the second quarter. He expects the trends for Data Centers to remain strong this year. He also emphasized that Intel Corporation’s lack of plan for a CEO succession provides a significant pause for the research firm to offer any investment thesis.

According to Freedman, RBC Capital Markets expect Intel Corporation (NASDAQ:INTC) to report a revenue that is lower than $12.2 billion to $13.2 billion range. He emphasized that a mix might result to positive gross margins unless the company’s inventory write-off are higher than expected.

He cited that Intel will be able to prevent inventory write-offs if the company launch its new products on a limited volume, which allows the work down of existing inventory.

Freedman also believed that the chipmaker’s inventory of PC components remain low, but it is possible that it would be above seasonal if the demand does not pick up by the end of the second quarter.

RBC Capital Markets estimated that Intel Corporation (NASDAQ:INTC)’s revenue will be around $12.47 billion, gross margin at 58.8 percent, at earnings per share (EPS) at $0.40 in the first quarter of 2013. The revenue estimate for the company is -7.5 percent quarter over quarter.

For the second quarter, the research firm estimated that the company’s revenue will be approximately $12.2 billion, 59.1 percent gross margin, and $0.38 earnings per share compared with the consensus estimate at $12.93 billion revenue, 57.8 percent gross margin, and $0.41 EPS.

Freedman emphasized that the upside for Intel Corporation (NASDAQ:INTC) for 2013 and 2014 is limited to GDP growth. In his note to investors, he wrote, “INTC is exposed to a lower replacement cycle and mobile cannibalization as Win8 and Ultrabooks have underwhelmed. We believe its vision of a computing ecosystem moving to a convertible PC/tablet device is a wait and see story.”

RBC Capital Markets recommended a perform rating with $24 price target for the shares of Intel Corporation (NASDAQ:INTC). The stock price of the company is trading around $21.41 per share in New York on Tuesday.