Intel Corporation (NASDAQ:INTC) could be forced to limit availability of its upcoming Haswell processors if the demand in the PC market remains sluggish according to a new report from RBC Capital Markets. The report asserts that the upgrade is unlikely to be a catalyst for greater PC demand in the second half of the year.
The RBC report puts a twelve month price target of $24 on Intel Corporation (NASDAQ:INTC) shares. On the market this morning, the firm’s shares were trading up by almost 1.5 percent. At time of writing, shares stood at $21.68.
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The analyst Doug Freedman estimates that PC component inventories will be overly high in the second quarter of 2013 because of low demand in the PC market. In order to avoid an inventory write off that would negatively impact gross margins at Intel Corporation (NASDAQ:INTC), the company may be forced to limit availability of its newest generation of microprocessors.
Haswell is the codename for the next upgrade to Intel Corporation (NASDAQ:INTC) processors. The chips are expected to be released in June and are expected to become available to consumers in the fourth quarter of 2013. The processors represent an upgrade to the company’s Ivy Bridge chips, and will utilize a 22 nanometer manufacturing process.
In order to keep its margins steady, Intel may limit productions of chips with Haswell architecture in order to move computers that still use Ivy Bridge and older chipsets. If the company follows that prescription, Haswell chip computers may be difficult to come by when they finally surface toward the end of the year.
On the earnings front, Freedman expects Intel Corporation (NASDAQ:INTC) to put up revenue and profit at the lower end of guidance when it releases its numbers after the market closes today. Earnings per share is estimated to have been $0.40 per share during the first quarter while revenues are expected to come in at $12.47 billion.
The major indications for Intel Corporation (NASDAQ:INTC) for the remainder of 2013, according to the RBC report, is the company’s search for a new CEO, Data Center activity, changes in the PC market, Windows Blue and the inventory problems mentioned above.
If Intel Corporation (NASDAQ:INTC) does decide to restrict supplies of its newest chips, it could be an unpopular move with PC makers and consumers alike. The company will host an earnings call at 5 p.m. EST Tuesday in order to discuss its first quarter earnings, where some information on inventories might be shared with analysts and investors.