News From Inside The Industry

A financial investment firm's checks with PC builders have found that both Intel and AMD are ahead of projections and their third-quarter sales could exceed the previous estimates of both companies.

FBR Capital Markets did its usual monthly checks of major notebook original design manufacturers (ODMs) and desktop motherboard makers and found more good signs for both Intel and AMD.

Overall, FBR forecasts third-quarter PC builds will grow 22 percent from the second quarter, an improvement from the 18 percent it projected just last month. Laptop unit builds are expected to rise 25 percent, up from 21 percent projected in August, and desktop builds are expected to grow 17 percent from Q2, up from 13 percent.

This is the third time this quarter FBR has raised its estimates for Intel and the first time for AMD.

"The positive revision to 3Q notebook builds is due to demand momentum for consumer ultra-low-voltage (CULV) models, new netbook launches (Hewlett Packard, in particular), and, potentially, some stimulative impacts from the upcoming launch of Windows 7. The positive revision to 3Q desktop builds is due to better demand from Europe, thus far, in September," FBR analyst Craig Berger wrote in a research note.

He added that there are reports of product shortages for hard disk drives, LCD panels, power management integrated circuits, and LCD glass, in particular. In this case, a shortage is a good thing: It means demand is rising across the board.

FBR is leaving its earnings per share estimates for Intel unchanged from last month, with $0.66 for FY2009 and $1.20 for FY2010. But it said Intel could grow revenues by 15 percent sequentially in the third quarter, which would be on the high end of Intel's revenue guidance of 10 to 15 percent. It maintained a target stock price of $21.

"While we commend Intel's management for its stellar process, product, and business execution in this downcycle, we believe the Atom processor will drive negative cannibalization impacts in coming years; and we think that other stocks, such as 'Marvell' or 'Broadcom', offer better growth and upside return at current valuations," Berger said.

He was a bit more bullish on AMD, which also has a lot more room to grow. Read the rest at InternetNews.com.