Consumer Electronics
Rising Inventory Risks At Intel (INTC, WDC, STX)
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Canaccord’s Booby Burleson noted in a report, “We see risk of inventory correction for Intel in the first quarter. Recent checks indicate Intel’s customers are experiencing CPU inventory growth in Q4 as a result of hard disk drive shortages.” The report noted that Tier-2 customer inventories appear to be growing the most and have grown to “around six to seven weeks” versus a normal count four weeks. At the top, the Tier-1 customers are also noted as seeing inventories grow to about 1.5 weeks above normal.
The blame is being put on hard disk drive shortages at a time of increasing uncertainty about overall PC demand. The Thailand floods are the biggest single contributor here as has been noticed out of Western Digital Corporation (NYSE: WDC). Western Digital’s woes have actually gone on to help rival Seagate Technology PLC (NYSE: STX) in its most recent guidance.
A week ago came an upgrade of Western Digital to ‘Overweight’ by Barclays, but the problems from October brought on prior analyst downgrades from Needham, J.P. Morgan, S&P, and others.
The Canaccord Genuity research this morning is also about a week after Raymond James downgraded Intel to “Market Perform” based upon upside limits on unit sales.
Pointing out one research report of caution does at least need to be considered as overlooked and potentially discounted entirely when shares are up 4.9% at $24.74 due to global stock strength. Thomson Reuters has a consensus price target of $26.65 for the stock and the 52-week trading range is $19.16 to $25.50.
JON C. OGG
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