Intel Corp could face pressure on gross margins from the lack of demand for personal computers amid rising competition and a weakening global economy, warned Wall Street analysts after the company cut its 2012 revenue forecast.<\/p>\n
Analysts from at least four brokerages lowered their price targets on Intel after the world’s leading chipmaker on Tuesday reported second-quarter revenue slightly below analysts’ expectations.<\/p>\n
The company also cut its 2012 revenue growth view to between 3 and 5 percent from its prior view of “high single-digit growth.”<\/p>\n
Analysts raised concerns about Intel’s inventory levels rising about 9 percent sequentially for the second quarter.<\/p>\n
“While we can’t rule out the risk that inventory build represents to gross margins, it is incumbent upon a weaker demand environment than Intel currently envisions; in other words, inventories themselves are not the problem — demand is the primary concern,” Citi Investment Research analysts said.<\/p>\n
Intel, which said a glut in its Ivy Bridge microarchitecture was the major reason for increased inventory, maintained its 2012 gross margin forecast of 64 percent.<\/p>\n
It also predicted “Ultrabooks” would comprise 40 percent of all laptops sold by the year-end.<\/p>\n
But analysts at Piper Jaffray believe the company’s weaker outlook is also a result of “too expensive” Ultrabooks and consumers preferring smartphones and tablets to personal computers.<\/p>\n
“We expect lack of excitement in PC clients will drive a mix shift to lower price point notebooks and ultimately pressure gross margin and growth,” Piper Jaffray analysts said.<\/p>\n
Shaky economies in Europe and the United States and a growing consumer preference for Apple Inc’siPad tablets have been taking a toll on the PC industry.<\/p>\n
Evercore Partners cut its price target on Intel stock to $26 from $27, while Canaccord Genuity lowered it to $26 from $28. Jefferies & Co reduced its target price on the stock to $29 from $30 and RBC Capital Markets slashed it to $30 from $33.<\/p>\n
According to Thomson Reuters StarMine, 13 analysts rate the stock “strong buy,” 11 rate it a “buy,” 25 a “hold,” and five have a “sell,” with a mean price target of $29.14.<\/p>\n
Shares of Intel, which competes with smaller rival Advanced Micro Devices, closed at $25.38 on Tuesday on the Nasdaq. The stock has lost nearly 10 percent since end-April.<\/p>\n
Intel shares were down 1 percent in Frankfurt trading by 1050 GMT (6.50 a.m EDT) on Wednesday.<\/p>\n
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