Intel To Narrow Forecast Range

Intel Corp. is expected to narrow its second quarter forecast to the $8 billion range because of growing demand for NOR flash memory and the stabilization of the notebook PC market, according to a report from Pacific Crest Securities Inc. on Tuesday.

"During Intel's mid-quarter update on June 3, we expect the company to tighten its Q2 revenue guidance range to $7.9 billion to $8.1 billion from the previous range of $7.6 billion to $8.2 billion," said Michael McConnell, an analyst with Pacific Crest, an investment banking firm in Portland, Ore.

Overall, McConnell projected Intel will earn $0.24 a share on sales of $7.9 billion in the second quarter.

Intel disclosed its forecast for the second quarter when it reported first quarter revenue of $8.1 billion, down 7 percent sequentially and up 20 percent year-over-year. First quarter net income was $1.7 billion, down 20 percent sequentially and up 89 percent year-over-year. Earnings per share were 26 cents, down 21 percent sequentially and up 86 percent from 14 cents in the first quarter of 2003.

In 2003, Intel posted second-quarter revenue of $6.8 billion. Second quarter net income was $896 million. Earnings per share were $0.14.There is good and bad news for Intel. "A workdown of excess notebook inventories, as evidenced by improving Taiwanese ODM unit shipments (up 12 percent sequentially), coupled by renewed flash memory market share gains at distributors and OEMs, should underlie a positive tone from management," McConnell said in the report.

But the desktop PC market remains sluggish amid seasonal trends. The company's bottom line will also be affected by an "ongoing stall in demand for desktop chip sets and motherboards ahead of the Grantsdale launch on June 21," he said.

Grantsdale is Intel's next-generation chip set, which supports its 90-nm Prescott desktop processor and double-data-rate SDRAM-II memory.