Wednesday, July 18, 2007

ThinkEquity's Eric Ross comments on Intel (NASDAQ:INTC)

- ThinkEquity's Eric Ross comments on Intel (NASDAQ:INTC) following results noting margins were lower than expected, and w/o a lower tax rate, the company would have been in line with consensus. Guidance was essentially in-line as well. They weren't expecting a strong quarter from Intel despite consensus, and are not changing their stand: firm believes AMD is gaining share in consumer desktops and laptops, forcing Intel to fight with lower pricing and tempering some of its growth until 2008. ThinkEquity expects Intel will do okay, but not outperform through 2007. Reiterates Accumulate rating and $26 tgt.

The big question: why were margins lower than expected? Gross margin in the second quarter was 46.9%, short of the company's forecast of 48%. The co attributed it to lower ASPs for processors and chipsets, and to a much-worse NOR flash business. If Intel piled on the 45nm start-up costs during the quarter and can reduce these in 3Q07 and beyond (while ramping 45nm faster), this was definitely worth it. However, the firm plans to wait to see if 45nm is ramping faster before getting more aggressive on their model.

Notablecalls: I think INTC goes sub-$25 today.


Jerome Ball said...

Unrelated to Intel, but certainly a notable call, Roth Capital on Monday downgraded First Cash from buy to hold. Tuesday, FCFS reported nice earnings. Today, Roth upgraded them right back to buy.... I suppose it's good to see an analyst admit he just plain blew it, but isn't it traditional to wait for data before firing off that note?... ;)

notablecalls said...


I'd much rather have the analyst admit blowing it than stubbornly hanging on to the wrong view.