Merrill Lynch cut estimates on Intel (INTC).
Analyst Joseph Osha says the first two months of the second quarter were soft, making it tough for him to defend a sequential revenue rise. He notes Taiwanese motherboard and laptop unit shipments look to be flat sequentially in May after a 17% decline in April. He also notes DRAM pricing has declined, and that spot pricing is driven by reduced supply -- not increased demand.
Osha cut his $0.77 second quarter earnings per share estimate to $0.75 on $6.76 billion in revenue. He expects Intel to set the 2003 capital expenditure bar at between $5.5 billion and $6 billion. Despite his estimate cuts, Osha says he expects the stock to trade well through the next few weeks as business recovers seasonally. He also thinks Intel has left a lot of gross margin headroom for later in the year.