Wednesday, September 06, 2006

Calls of Note Part 3

- While several firms are positive on Intel (NASDAQ:INTC) after the announced restructuring program, Citi's comments sum it up the best:

Intel announced its restructuring and associated saving of $2B in 2007 and $3B in 2008 from a 10.5K workforce reduction and savings in other expenses. Headcount reduction of 10.5K was in line with Citi's expectations (although below some market expectations). However, expected cost savings of $2B is $800M above firm's expectations.

Firm's EPS estimate increases by $0.24 for 2007; they anticipate upward estimate revision to consensus. This marks the first upward estimate revision for Intel after nine months of declines. Firm views this as a positive for the shares. Solid PC back-to-school sales (August up 40% m/m at US POS retail), combined with improving sales trends in 2H August and improving visibility for 4Q06 at notebook ODMs should also act as positive catalysts for INTC.

2007 EPS estimate increases to $1.28 from $1.04 and 2008 EPS estimate to $1.56 from $1.21. Target price goes to $23 from $21. Maintains Buy.

Notablecalls: I suspect any gap up will be faded at current levels. The n-t catalyst has played out and back-to-school demand will cool off soon.

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