EARNINGS PREVIEW: US Chip Makers Regain Momentum After Quake

TAKING THE PULSE: U.S. semiconductor makers feared the worst after Japan's massive earthquake disaster in March, but the sector showed its resilience in the second quarter after most supply-chain disruptions caused by the natural disaster proved short-lived. Some manufacturers are poised to reap greater profits from the booming market for smartphones, still the brightest spot in the sector.

At the same time, some large handset makers have been struggling and larger macroeconomic worries have hurt demand. Consumer spending on personal computers also remains soft. Analysts disagree over how much consumer demand for computer products will matter to chip makers' overall revenue: IHS iSuppli (IHS) last month boosted its view of global semiconductor sales, while rival Gartner Inc. (IT) lowered its estimate, largely on weak projections for personal computers.

 
   COMPANIES TO WATCH: 
 
   Intel Corp. (INTC) - reports July 20

Wall Street's Expectations: Analysts polled by Thomson Reuters expect a per-share profit of 51 cents with $12.82 billion in revenue. A year earlier, the company reported a profit of 51 cents a share, which included a $1.45 billion antitrust fine from the European Union, on $10.77 billion in revenue.

Key Issues: Weakening consumer demand for personal computers has done little to hurt Intel, which has posted record results in recent quarters despite a potentially damaging product recall earlier in the year. The company, which makes chips that are used in more than 80% of the world's computers, continues to expand its already-commanding market share, thanks largely to robust demand for servers, of which it supplies about 90%. Flagging sales of netbook computers could present a headwind, however, as consumers opt for tablet computers such as Apple Inc.'s (AAPL) iPad, which doesn't rely on traditional central processing units based on Intel's x86 architecture.

 
   Qualcomm Inc. (QCOM) - reports July 20

Wall Street's Expectations: Analysts polled by Thomson Reuters expect a per-share profit of 71 cents on $3.6 billion in revenue. The company earned 47 cents a share in the prior year, or 57 cents excluding stock-based compensation and other factors, on revenue of $2.71 billion.

Key Issues: Qualcomm is among the biggest suppliers of chips for smartphones, including those that operate using Google Inc.'s (GOOG) Android platform, a key source of growth. Rising demand for 3G smartphones has boosted royalties earned by Qualcomm, but its recent $3.1 billion acquisition of Atheros Communications will modestly hurt adjusted per-share earnings this year.

 
   Advanced Micro Devices Inc. (AMD) - reports July 21

Wall Street's Expectations: Analysts polled by Thomson Reuters expect a per-share profit of 8 cents on $1.58 billion in revenue. A year earlier, AMD reported a per-share loss of 6 cents, including 17 cents of spinoff-related costs, and $1.65 billion in revenue.

Key Issues: AMD has benefited from the introduction of its new Fusion processors, which combine central processing and graphics functions on the same piece of silicon. Sales have been strong for its chip for low-end computers and netbook computers. However, analysts are still skeptical of Fusion's mainstream iteration, called Llano, especially given the strength of Intel's competing offerings in both personal and enterprise computing. In addition, analysts have said AMD is falling behind in its plan to address a new mobile-centric world as it seeks a replacement for former Chief Executive Dirk Meyer, who was forced out in January.

 
   Texas Instruments Inc. (TXN) - reports July 25

Wall Street's Expectations: Analysts polled by Thomson Reuters expect a per-share profit of 53 cents on $3.44 billion in revenue. A year earlier, the company earned 62 cents a share and had $3.5 billion in revenue.

Key Issues: Production is essentially back to normal at one of Texas Instruments' damaged Japanese manufacturing plants and is ramping at the other, but effects of Japan's March earthquake have still pressured both sales and earnings in the second quarter. In addition, weakness at handset-maker Nokia Corp. (NOK, NOK1V.HE) led Texas Instruments to lower its outlook last month.

 
   Broadcom Corp. (BRCM) - reports July 25

Wall Street's Expectations: Analysts see earnings at 63 cents a share on $1.81 billion in revenue. A year earlier, the company earned 52 cents a share--66 cents excluding items--and had $1.6 billion in revenue.

Key Issues: Broadcom also benefits from high exposure to the fast-growing smartphone market, as well as its broadband business providing connectivity products for areas such as the home. But weakness at major mobile and wireless customers, such as Nokia, have been hurting results, leading the company in April to project lower-than-expected second-quarter revenue.

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

-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; Andrew.FitzGerald@dowjones.com

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