From Business Wire today we have this report:
It's surprising that just over a month ago, Intel reported stellar earnings and very positive forward guidance. Now today we suddenly have this update to the company's outlook.
Apparently, this confirms the suspicions of several analysts from JPMorgan, Barclays and Wedbush who have been saying that PC demand is clearly slowing.
Then there is this chart from my post on the recent Durable Goods report for July:
This shows new orders in the Computers and Related Products segment falling 12.7% month-over-month. Historically speaking, this is a larger than usual decline and there is little doubt that Intel is beginning to see the drop in demand that this chart suggests.
Something I didn't chart in the post on the Durable Goods report is Unfilled Orders. After two months where unfilled orders grew at over 5% month-over-month, in July we saw a decline of more than 7%.
I've been a cheerleader for tech in general and semiconductors in particular but it does look like growth is taking a breather. From the point of view of stock prices, we are now seeing solid, market leading companies such as Intel and Cree reaching levels of quite attractive valuation. The following charts show how beaten down these two companies are currently:
Given how volatile the semiconductor sector is, it's always worth watching. A few pieces of unexpected good news and it could turn on a dime. You'll want to be ready for it when companies like Intel and Cree begin their recovery.
Disclosure: no positions
Intel Corporation (INTC) today announced that third-quarter revenue will be below the company's previous outlook. The company now expects third-quarter revenue to be $11.0 billion, plus or minus $200 million, compared to the previous expectation of between $11.2 and $12.0 billion. Revenue is being affected by weaker than expected demand for consumer PCs in mature markets. Inventories across the supply chain appear to be in-line with the company's revised expectations.
The company's expectation for third-quarter gross margin is now 66 percent, plus or minus a point, lower than the previous expectation of 67 percent, plus or minus a couple of points. The impact of lower volume is being partially offset by slightly higher average selling prices stemming from solid enterprise demand.
It's surprising that just over a month ago, Intel reported stellar earnings and very positive forward guidance. Now today we suddenly have this update to the company's outlook.
Apparently, this confirms the suspicions of several analysts from JPMorgan, Barclays and Wedbush who have been saying that PC demand is clearly slowing.
Then there is this chart from my post on the recent Durable Goods report for July:
This shows new orders in the Computers and Related Products segment falling 12.7% month-over-month. Historically speaking, this is a larger than usual decline and there is little doubt that Intel is beginning to see the drop in demand that this chart suggests.
Something I didn't chart in the post on the Durable Goods report is Unfilled Orders. After two months where unfilled orders grew at over 5% month-over-month, in July we saw a decline of more than 7%.
I've been a cheerleader for tech in general and semiconductors in particular but it does look like growth is taking a breather. From the point of view of stock prices, we are now seeing solid, market leading companies such as Intel and Cree reaching levels of quite attractive valuation. The following charts show how beaten down these two companies are currently:
Given how volatile the semiconductor sector is, it's always worth watching. A few pieces of unexpected good news and it could turn on a dime. You'll want to be ready for it when companies like Intel and Cree begin their recovery.
Disclosure: no positions
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