Daily Management Review

PC Market Improvement Drives Intel Revenue Forecast up


09/16/2016




PC Market Improvement Drives Intel Revenue Forecast up
In a growing trend this year, there has been an improvement in PC demand and suppliers of parts used in personal computers are steadily replenishing their inventory, and this has encouraged Intel Corp as the US chip maker raised its quarterly revenue forecast for the first time in more than two years.

The positive forecast by the world's largest chipmaker resulted in the rise of the company shares by as much as 4.1 percent to touch a high that has not been achieved in more than 15-year. The share price was pegged at $38.05 on Friday.
 
In recent years, as tech users shift away from PCs to mobile phones for their computing needs, Intel, which helped found the personal computer industry, has been struggling to generate enough revenues.
 
In the latest quarter revenue from sale in the company's PC business declined 3 percent to $7.3 billion. The unit includes sales of chips for mobile phones and tablets.
 
However in recent months there have been encouraging signs that the PC market is reviving again as demand rises.
  
Revenue in its computer business rose 7.5 percent in the third quarter from the second as sales of notebooks improved, said HP Inc, which houses the hardware business of the former Hewlett-Packard Co, last month.
 
Commentary from Intel and HP suggested that PCs were "not as dead as people were thinking", said FBN Securities analyst Shebly Seyrafi.
 
Buoyed by the rise in demand in the United States, there was less decline than was expected in the global PC shipments in the second quarter, Research firm IDC said in July.
 
"We expect PC units to decline less than the high-single-digit decline consensus in 2017, driven by continued Windows 10 upgrades and accelerating SSD adoption, along with new form factors," Baird Equity Research analyst Tristan Gerra wrote, raising his price target to $42 from $40.
 
Compared with what it had predicted as forecast of $14.9 billion, plus or minus $500 million, Intel said on Friday it expected third-quarter revenue to be $15.6 billion, plus or minus $300 million. According to Thomson Reuters data, that implies the highest-ever quarterly revenue for Intel. According to Thomson Reuters I/B/E/S, analysts on average were expecting $14.90 billion.
 
The price that he had set for the Intel shares were raised by $2 to $38 by RBC Capital Markets analyst Amit Daryanani. He recognized the pre-announcement as a good first step towards the stabilization of the PC unit at Intel, Daryanani said.
 
While shares of Micron Technology Inc and HP were marginally higher, shares of rival Advanced Micro Devices Inc were up about 1 percent. At $37.53 in afternoon trading, the shares of Santa Clara, California-based Intel were up 2.6 percent.
 
Underperforming the 20.8 percent gain in the broader Philadelphia SE Semiconductor Index .SOX during the period, the stock had risen 6.1 percent this year up to Thursday's close.
 
(Source:www.reuters.com) 






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