Intel painted a rosierfourth-quarter earnings picture than originally expected, but at least oneanalyst firm has not changed its overall outlook for the company.
In a Thursday announcement after themarket close, the world’s largest semiconductor manufacturer raised revenue estimates from $9.3 billion to $9.5 billion. InOctober it had made conservative estimates of $8.6 billion to $9.2 billion.
Not Much Difference
“Intel’s fourth quarter is shaping up to be better than we originallyanticipated, but we are keeping our fair value estimate unchanged at $22 pershare,” Morningstar’s Jeremy Lopez wrote in an analyst’s note this morning.
“This doesn’t change my view of what’s going on in the world,” Lopez toldTechNewsWorld. “I think in 2005, Intel is going to have a halfway decent year.”
Intel originally expected a continuation of soft chip demand, but it has seen abump up towards average growth in what istraditionally the best quarter for the semiconductor market.
“The midpoint of the estimates would put fourth quarter sequential growth at 11percent,” Lopez said. “This range is at the low end of seasonal norms.” The previousestimates put midpoint growth at 5 percent.
Intel CFO Andy Bryant said that the company experienced stronger demand andgrowth across the board. He added, “Our inventory levels are on track todecline this quarter by several hundred million dollars.”
Morningstar’s Lopez saw that as a plus, saying that Intel had been paying the price forconverting its manufacturing process tooefficiently from 200 mm wafers to 300 mm wafers, which produced an inventory glut. Intel will still have to create enoughdemand to cover its expanded manufacturing capacity, he said.
“Long-term, I still think it’s an issue for them,” he said. “They’re increasingcapacity, but can they sell it? That’s the biggest challenge.”
Despite missteps that have, among other things, allowedcompetitor AMD to beat Intel to market with a dual processor chip, the companyis healthy, Lopez said.
“Intel is on pace for a second year of double digit sales growth, which isimpressive,” Lopez said.