EARNINGS PREVIEW: Rebound For US Chip Makers Continues in Q2

TAKING THE PULSE: Worries about the global economy have hurt shares of semiconductor manufacturers in recent weeks, but demand remains strong, according to better-than-expected reports in May by personal-computer makers Hewlett-Packard Co. (HPQ) and Dell Inc. (DELL). The Semiconductor Industry Association said Tuesday that global chip sales rose 4.5% on month in May, topping April's record for monthly sales, and were up 48% from the prior year's downtrodden levels. The group last month boosted its chip-sales targets for this year.

 
    COMPANIES TO WATCH: 
 
    Intel Corp. (INTC) - reports July 13

Wall Street Expectations: Analysts polled by Thomson Reuters anticipate earnings of 43 cents a share on revenue of $10.25 billion. A year earlier, the world's largest chip maker by revenue reported a loss of 7 cents a share on revenue of $8.02 billion; that quarter included a $1.45 billion charge related to a record antitrust fine levied by the European Union.

Key Issues: Intel, which controls more than 80% of the market for chips that make up a computer's brain, has been pushing into new areas such as TV technology and tablet computing. Chief Executive Paul Otellini in May predicted Intel would post annual earnings and revenue growth in the low double digits on a percentage basis near term--double its recent rate.

 
    Advanced Micro Devices Inc. (AMD) - reports July 15

Wall Street Expectations: Analysts are looking for earnings of 7 cents a share on revenue of $1.55 billion, compared with a prior-year loss of 49 cents a share on $1.18 billion in revenue.

Key Issues: AMD--which has badly lagged Intel in sales of chips used in laptop computers--recently has seen a number of the biggest PC makers announce portable products using its products. AMD is benefiting from its spinoff of GlobalFoundries Inc., the manufacturing operation that it still partially owns, which is likely to ensure more consistent profit and cash flow.

 
    Texas Instruments Inc. (TXN) - reports July 19

Wall Street Expectations: The analog-chip giant is projected to report a profit of 62 cents a share on revenue of $3.52 billion, up from 20 cents a share and $2.46 billion, respectively, last year.

Key Issues: TI--which makes chips used in cellphones, factory equipment and other electronics--raised the bottom end of its second-quarter view last month. The company is winding down its business selling some mobile chips while increasing its focus on highly profitable analog and embedded-application chips. It expects a new factory will allow it to gain market share.

 
    Qualcomm Inc. (QCOM) - reports July 21

Wall Street Expectations: The world's largest wireless-chip maker is seen posting fiscal third-quarter earnings of 54 cents a share on revenue of $2.63 billion. Prior-year earnings were 44 cents a share, including 10 cents of charges, on revenue of $2.75 billion.

Key Issues: The cellphone-chip maker, which also charges handset makers royalties for using its patents, is stepping up efforts to move beyond its core business. Still, Qualcomm is expected to benefit as Apple Inc. (AAPL) creates an iPhone for Verizon Wireless later this year because it makes the chips that go into phones compatible with that network.

 
    Broadcom Corp. (BRCM) - reports July 27

Wall Street Expectations: Analysts anticipate second-quarter earnings of 61 cents a share on revenue of $1.59 billion, compared with a year-earlier profit of 3 cents a share--including a net 22 cents of charges--on revenue of $1.04 billion.

Key Issues: The communications-chip supplier has been gaining market share in handsets and has benefited from strong sales of chips for mobile data and converged devices. Analysts estimated the company could add 2 cents a share in earnings from its two chips in Apple's fast-selling iPad tablet device.

(The Thomson Reuters estimate and year-earlier figures may not be comparable due to one-time items and other adjustments.)

-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357; Kathy.Shwiff@dowjones.com

Texas Instruments (NASDAQ:TXN)
Historical Stock Chart
From Jul 2024 to Aug 2024