Stock Picks: Intel, Time Warner, Viacom

Wall Street analysts offer buy, sell, or hold opinions on stocks in the news on Aug. 5

By Businessweek.com and Bloomberg News Staff

Intel: Miller Tabak equity analyst Brendan Furlong maintained a neutral rating and $25 price target on shares of Intel (INTC) on Aug. 5.

On Aug. 4, the U.S. Federal Trade Commission said Intel, the world's largest computer chipmaker, can't use threats, retaliation, or exclusive deals to block customers from buying competitors' products under a settlement of antitrust charges. The settlement covers graphics chips, central processors, and chip sets, the FTC said.

Under the settlement, Intel agreed not to give computer makers any discounts or other inducements in exchange for promises they will buy chips exclusively from Intel, the FTC said. The company can't withhold these perks from customers that also buy from Intel's competitors, the agency said. Intel can still offer volume discounts and match rivals' price cuts, according to the agreement.

The settlement will require Intel to change agreements with Advanced Micro Devices (AMD), Nvidia (NVDA), and Via Technologies in Taiwan so the chipmakers can enter into mergers and joint ventures with other companies without fearing a patent infringement lawsuit from Intel.

An Intel official said in a statement that the chipmaker hasn't admitted any violation of the law or accepted the facts alleged by the complaint.

The FTC commissioners approved the proposed settlement 4-0. Commissioner William Kovacic was recused. The public will have 30 days to comment on the settlement, and then the commissioners will vote on whether to make it final.

In a note, Furlong said the FTC settlement was "a long-term positive for Intel, as the ruling appears to us to be benign."

"However, we still have several concerns that we think are likely to keep a lid on the stock in the near term," the analyst wrote. "Investors will want to see how [computer manufacturers] report in coming weeks to confirm that PC demand is as strong as Intel is indicating." Furlong noted that investors are "likely to wait until after the summer to see if the second half of the year is indeed shaping up as Intel is forecasting."

Furlong said he had a longer-term bullish stance on Intel, citing the company's market share, product positioning, revenue, and gross margins.

"With the company at peak margins and earnings, we think the current risk-reward on the stock" warrants a neutral rating, the analyst wrote. "As the year progresses, if we get more comfortable with the risk-reward, we may turn more positive on the shares."

Time Warner: Janney Montgomery Scott equity analyst Tony Wible assigned a buy rating and a $38.50 fair value estimate to shares of Time Warner (TWX) on Aug. 5.

On Aug. 4, Time Warner, owner of the TNT television channel and Time Inc., reported second-quarter profit that beat analysts' estimates after cable television and magazine advertising increased.

Excluding some items, earnings rose to 50¢ a share, the New York company said in a statement. Analysts projected 46¢, the average of 21 estimates compiled by Bloomberg.

The company's Time Inc. magazines, which include People and Fortune, sold more advertising, as did the TNT and TBS cable networks, underscoring the U.S. advertising rebound. International ticket sales for Clash of the Titans, the film from Warner Bros., also helped boost revenue.

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