Friday, June 09, 2006

Calls of Note Part 2

- Merill Lynch thinks there's material risk to INTC's Q2 outlook in light of recent developments, and they are reducing their estimates for Q2 and the remainder of the year. Our thesis in terms of the company's competitive positioning has not changed, but clearly the demand environment is weaker than the firm had expected. The valuation is attractive enough, even on lower earnings estimates, to merit the Buy rating.

Notablecalls: Not actionable but good to know category.

- Merrill Lynch is slightly reducing their AMD earnings estimates for Q2, all of 2006 and 2007. Firm thinks that AMD is struggling to cope with the weak demand environment in desktop computing. Server market share gains should help, but aren't enough, and AMD still is making only limited headway in mobile. Maintains Sell

Notablecalls: Not actionable but good to know category.

- FBR notes that XRTX's largest customer for disk drive capital equipment is Seagate, and Seagate just updated its capex plans at its analyst day Thursday. The net of the prepared remarks and discussions with management was very good news for Xyratex. Firm now considers it likely that Xyratex will provide August-quarter guidance well above current Street estimates when it reports its quarter on June 21. Beyond the August quarter, they believe the outlook for Seagate investment in Xyratex gear may be meaningfully better than what is currently reflected in Street estimates well into 2007 and, by that time, the firm also expects Hitachi's disk drive test business with Xyratex to begin ramping significantly. Reiterates Outperform rating on what continues to be firm's Top Pick in enterprise hardware.

Notablecalls: The calls looks to be actionable. Expect the shares to move up in the coming days.

- Citigroup notes May video game industry sales tracked by NPD posted a 2% gain, with a 24% gain in hardware dollar sales offset by a software dollar sales decline of 10%.

According to the firm the biggest surprise was a 97% increase in May software dollar sales for ATVI on the strength of two movie-related releases, resulting in only a 4% decline in quarter-to-date sales (vs. firm's F1Q07 est of -47%). Given this performance, shares could see a short-term rise.

Notablecalls: Not actionable but good to know category.

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