EARNINGS PREVIEW: US Chip Makers Intel, AMD See Cooling Demand

TAKING THE PULSE: Big chip makers Intel Corp. (INTC) and Advanced Micro Devices Inc. (AMD) cut their third-quarter revenue guidance, citing weaker-than-expected demand. The reductions come after many semiconductor companies reported record second-quarter sales on a continued demand rebound for electronic devices. Research firms iSuppli Corp. and Gartner have lowered their 2010 estimates for global chip growth in response to the caution exhibited by some chip makers.

The second half of the year is traditionally a strong period for tech spending as people make back-to-school and holiday-shopping purchases and corporations spend what remains of their information-technology budgets. However, the sector faces tougher comparisons as demand was rebounding in the second half of last year.

 
   COMPANIES TO WATCH: 
 
   Intel Corp. (INTC) - reports Oct. 12

Wall Street Expectations: Analysts polled by Thomson Reuters anticipate earnings of 50 cents a share on revenue of $10.99 billion. A year earlier, the world's largest chip maker by revenue reported a 33-cent profit on revenue of $10.22 billion.

Key Issues: Intel--which controls more than 80% of the market for chips that make up a computer's brain--in August cut its revenue and margin forecast, citing "weaker-than-expected demand for consumer PCs in mature markets." The company has been on an acquisition streak, inking deals for computer-security software firm McAfee Inc. (MFE) and the wireless unit of German chip maker Infineon Technologies AG (IFNNY, IFX.XE).

 
   Advanced Micro Devices Inc. (AMD) - reports Oct. 14

Wall Street Expectations: The chip maker, a distant No. 2 to Intel in the computing-chip business, is projected to report a profit of seven cents on revenue of $1.61 billion. A year earlier, it posted a loss of 18 cents on revenue of $1.4 billion.

Key Issues: AMD--which sells microprocessor chips and graphics-processing units--last month predicted a 1% to 4% revenue decline from the second quarter on weaker-than-expected demand for notebook computers. The company has benefited from its spinoff of its former manufacturing operation, which it still partially owns. A comment that Oracle Corp. (ORCL) may buy a chip maker triggered speculation that AMD could be a target.

 
   Texas Instruments Inc. (TXN) - reports Oct. 25

Wall Street Expectations: The analog-chip giant is forecast to post a profit of 69 cents on revenue of $3.69 billion, up from 42 cents and $2.88 billion, respectively, a year earlier.

Key Issues: TI--which makes chips used in cellphones, factory equipment and other electronics--last month narrowed its third-quarter view while noting weakness in consumer markets and continued strength for the industrial and wireless infrastructure spaces. The company is winding down its business selling some mobile chips while increasing its focus on highly profitable analog and embedded-application chips.

 
   Broadcom Corp. (BRCM) - reports Oct. 26

Wall Street Expectations: The company is seen posting earnings of 71 cents on revenue of $1.75 billion, up from 16 cents and $1.25 billion, respectively.

Key Issues: The communications-chip supplier is expected to benefit from continued strong demand for smartphone chips. Broadcom--whose chips are also used to power Apple Inc.'s (AAPL) iPad--has been gaining market share and recently partnered with Philips Electronics NV (PHG, PHIA.AE) to develop remotes that allow users to control televisions, cable boxes and Blu-ray Disc players with the wave of a finger or touch of a keypad.

 
   Qualcomm Inc. (QCOM) - reports Nov. 3

Wall Street Expectations: Analysts predict the world's largest wireless-chip maker to have fiscal fourth-quarter earnings of 59 cents on revenue of $2.84 billion. Year-earlier earnings were 48 cents on revenue of $2.69 billion.

Key Issues: The cellphone-chip maker, which also charges handset makers royalties for using its patents, is expected to benefit from the rise of tablets as more companies produce devices to rival the iPad. A recent report suggested Qualcomm chips may be chosen for Apple's iPhone 5. And the move to next-generation wireless networks in key markets such as China and India is expected to continue boosting profits.

(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

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