Banc of America lowers Intel earnings
Notebook inventory troubles in 2004, 2005
Intel's gross margins over the next few years will suffer at the hands of notebook inventory issues, US investment house Banc of America said today, before knocking back its earnings forecast for the chip giant.
BoA now believes Intel will yield earnings of $1.19 per share in 2004 and $1.46 in 2005, down from its previous forecasts of $1.27 and $1.54, respectively.
Essentially, inventory levels are forcing Intel to cut prices to sell product. That's currently hitting notebook products right now, though BoA said that situation will improve a little next quarter. Though any gain will be lost to a worsening situation in the mobo market.
"While notebooks are incrementally better in the second quarter of 2004, we believe motherboards are incrementally weaker," Boa said in a report sent to customers.
The investment house bases its claim on its own discussions with Taiwanese manufacturers, it said.
Longer term, Intel remains a strong bet, BoA said. Particularly as PC sales grow strongly during the second half of the year.
"We believe Intel remains one of the best-positioned semiconductor companies in our coverage universe over the long term," Banc of America said. ®