In a short while Intel will announce their Q2...followed by AMD a couple of days later. I've been busy to really do any analysis but I'm going to put some thoughts down anyways with an eye on what would happen to the stock.
Intel
I see two possible scenarios for Intel.
1. They hit the numbers (revenue/gross margin) they gave Wall Street at the end of Q1. In addition, EPS comes in as forecasted by the Street. This is a no win situation for them. The stock has grown significantly in the last few months. They will not be rewarded for this and expect a close to 5% drop almost instantly. If AMD pulls off a relatively "not so bad" quarter, then the Intel stock will get hammered.
2. They exceed their revenue numbers. They also beat Street forecast on EPS. If they can blow this away, they're heading north to the tune of 2-3% and the stock may even flirt with 27$. I think this is a high possibility because I think they were ultra conservative with their numbers. Since Intel always reports before AMD, they had no way of knowing how much AMD was bleeding in Q1. As a result of which I think they were conservative.
AMD
I think AMD has an easier quarter. After the abysmal Q1, there's no way but up. The question is how much up?
What AMD needs to do is meet or beat Q1 revenue Considering they had stuffed the channel in Q4 and the inventory should have worked itself out in Q1, they can expect some upside. However, balance this with seasonality where Q2 is usually the lowest quarter and this might balance things out. The key things to watch for are how Intel calls their server and desktop shares. If they call a big increase in servers, then AMD's revenue share is at risk. If they call a big desktop share increase then AMD's unit share is at risk. If both then AMD's entire quarter is at risk.
Either ways, I think AMD's price has not dropped sufficiently since the Q1 debacle with an uptick in the last couple of days. I think the stock will be static unless they really surprise pleasantly...which I think is unlikely.
One last thing, I'm also expecting Intel to win back another point or so of market share over the 5 points they won in Q1. Reason - it takes time to win back the channel so that market share momentum should carry them at least this quarter.
We'll see shortly.
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4 comments:
AMD is going dOwN
180 said: "One last thing, I'm also expecting Intel to win back another point or so of market share over the 5 points they won in Q1.
We won't see any market share numbers any time soon. Both Intel and AMD will probably just say "increase in volume shipped" which is always vague. We have to wait for a month for the report.
I will stick my neck out and say that the market share would either stay the same or AMD gaining a few points back. The reason being is that Q1 was a freak incident of channel stuffing, bad product mix and cancelled orders. This quarter was a little bit normalized for AMD.
While the market share swing won't be significant this time, let me just remind everyone that not all is well for AMD as its margins and ASPs continue to reveal how bad things are.
Intel 8.7B
Looks like #1 (mostly) panned out. Intel seemed to meet revenue & earnings just fine (+8.4%, $0.22/share) but the gross margins were hurt by the memory market for mobile phones (source: Bloomberg). The gross margins are causing a small sell-off.
However: 1. Profits up 44%!, and 2. Chip shipments are actually growing meaning marketshare is coming back.
I don't think AMD's outlook is so rosy. I have a feeling their stock has been edging up for 2 reasons: 1. markets are getting up and setting new records right now; 2. Buyout rumors.
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