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Intel May Shine on Semiconductor Stocks

NEW YORK ( TheStreet) -- Intel (INTC - Get Report) reports fourth-quarter results after market close, with investors eyeing potential upside for other semiconductor stocks.

"While gross margins are likely to be the primary focus for Intel investors, we believe ramping Ultrabooks and tablets combined with an unseasonably weak Q4 could prompt above-seasonal Q1 revenue guidance from the PC bellwether," wrote Canaccord Genuity analyst Bobby Burleson, in a note released on Wednesday.

Companies that could benefit from healthy Intel guidance include power-management specialists Intersil (ISIL - Get Report) and ON Semiconductor (ONNN), in addition to well-known chip makers AMD (AMD - Get Report) and Nvidia (NVDA - Get Report), according to Canaccord Genuity. Burleson adds that hard-drive maker Marvell (MRVL) could also see some short-term benefit.

Analysts surveyed by Thomson Reuters expect Intel to report fourth-quarter revenue of $13.53 billion and earnings of 45 cents a share. For the first quarter, analysts predict sales of $12.91 billion and earnings of 39 cents a share.

Nonetheless, there could still be big economic clouds hanging over Intel when it reports fourth-quarter results.

Intel cited weak demand in its third quarter, reflecting the ongoing PC slowdown. Tech research giant Gartner also highlighted this trend recently, noting that, year-over-year, PC shipments slumped 5% worldwide during the fourth quarter of 2012.

BMO Capital Markets analyst Ambrish Srivastava, however, thinks that the market for PC semiconductors has stabilized, but predicts ongoing volatility in the market for communications chips used in mobile devices.

Srivastava expects Intel to report fourth-quarter revenue of $13.6 billion and earnings of 46 cents a share. For the chip giant's fiscal first quarter, BMO's looking for sales of $13.1 billion and earnings of 38 cents a share.

RBC Capital Markets analyst Doug Freedman also expects Intel to post fourth-quarter upside, but acknowledges the company's continuing struggles in the PC market. "We still expect that sentiment will remain bearish after the call on lackluster PC demand and risk of slightly elevated inventories," he wrote. "Our recent checks in Asia suggest that after a small uptick at the end of November, December softened."

Investors will also be closely monitoring Intel's earnings conference call for information on the company's gross margins. The chip giant was recently upgraded to "buy" by Lazard Capital Markets, which cited the potential for improving gross margins.
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