UPDATE 4-Intel, global chip shares jump on talk of strong Q1

* Talk of Intel pre-announcing positive Q1 – analysts

* Shares up 4 percent

* Tech shares in Japan, Korea, Taiwan jump
(Adds Asian tech share reaction)

By Ian Sherr

SAN FRANCISCO, March 16 (BestGrowthStock) – Shares of Intel Corp
(INTC.O: ) jumped 4 percent to their highest in more than a year
on expectations that robust Asian sales and a rebound in
corporate spending will help the chipmaker beat current-quarter
earnings estimates.

The rally propelled gains in other semiconductor stocks,
with Advanced Micro Devices Inc (AMD.N: ) and Nvidia Corp
(NVDA.O: ) both rising more than 3 percent, while technology
shares in Taiwan, Japan and South Korea followed the gains in
Wednesday trading.

In January, Intel forecast first-quarter revenue and
margins above Wall Street expectations as demand for personal
computers from corporations rebounded after years of stretched
budgets and belt-tightening.

Now, analysts say, there is talk in the market the company
could pre-announce strong results soon. [ID:nN13151343]

“There’s speculation Intel will have a positive
pre-(announcement),” Auriga analyst Daniel Berenbaum said.

Intel spokesman Chuck Mulloy declined to comment and said
the company was in a quiet period ahead of its first-quarter
earnings announcement due on April 13.

Analysts also cite the Chinese New Year in February — a
season of high spending in China — as a reason for robust
sales, especially in computers, in the world’s No.3 economy.

The Asia-Pacific region, excluding Japan, accounts for
roughly three-fifths of Intel’s revenue. Wedbush Morgan analyst
Patrick Wang said there had been concerns about inventory build
up and poor sales leading up to the Chinese holiday.

But sales remained strong, pushed in part by Chinese
government programs to spur consumption of everything from cars
to household appliances. Beijing is encouraging scores of
technology upgrading projects as part of an effort to spur
spending on electronics, among other initiatives.

Analysts on average expect Intel to report a
current-quarter profit (Read more your timing to make a profit.) of 37 cents per share on sales of $9.79
billion, according to Thomson Reuters I/B/E/S.

Optimism over a strong outlook helped lift technology
shares across Asia, with Samsung Electronics (005930.KS: ), the
world’s No.1 memory chip maker, up 2.1 percent and 2nd-ranked
Hynix Semiconductor (000660.KS: ) gaining 1.7 percent.

In Japan, chip equipment maker Tokyo Electron (8035.T: ) rose
1.2 percent and Advantest (6857.T: ), which supplies testers to
chip makers such as Intel, gained 1 percent.

Taiwan’s electronics sub-index (.TELI: ) gained 1.4 percent,
with AU Optronics (2409.TW: ), a supplier of LCDs for computers
and flat-screen TVs, jumping 2.9 percent, and PC memory chip
maker Inotera (3474.TW: ) up 1.2 percent.

“Demand is very strong right now, and we’re also seeing
signs of a recovery in chip demand in the U.S. and Europe,”
said Tiffany Chen, a Taipei-based analyst with KGI Securities.

“The second quarter is usually the quiet season for most
tech companies, with revenues down about 10 percent
sequentially, but this year we’re likely to see it drop less
than that because of returning consumer demand.”


Some worried that margins may have peaked in the current
cycle, but analysts say strengthening demand may help propel
Intel’s earnings power further.

Broadpoint AmTech analyst Doug Freedman said that if
Intel’s revenues and margins are better than expected, the
bottom line of estimates could be pushed up by as much as 10

Intel’s share rally was accompanied by unusually high
volume in the options market.

Options traders exchanged about 244,000 contracts in Intel
— three times the normal level, according to option analytics
firm Trade Alert. The volume was led by the trading of 204,000
call contracts, as many traders rolled their bullish positions
from soon-to-expire March options to the April options.

March options expire on Friday after the close.

Intel shares have steadily risen this year, by nearly 4
percent as of Monday. Tuesday’s rally sent the stock to the
highest level since September 2008, when markets began
spiraling downward during the financial crisis.

“Our contacts roundly hailed the PC sector as likely to be
robust for the remainder of the year,” FBR Capital Markets
analyst Craig Berger said in a recent note to investors.

Many industry executives and analysts say there were
signals early in the year of a strong return of spending by
companies to upgrade equipment and software, though some expect
growth to sharpen only in the latter half of 2010.

Robert W. Baird analyst Tristan Gerra said he was seeing
strong sales of corporate notebooks. That, along with strong
forecasts from top-tier manufacturers and strong sales of Intel
chips released in January were pushing shares higher even
though gross margins may have peaked.

Intel launched new, more powerful server chips on Tuesday

“Intel has the strongest product portfolio in years,” Gerra

The Philadelphia Semiconductor Index (.SOXX: ) rose nearly 3
percent to 359.87. AMD stock gained 5.4 percent to $9.40 on the
New York Stock Exchange, while Nvidia rose 3.5 percent, Micron
Technology Inc (MU.O: ) rose nearly 5 percent, and Intel advanced
almost 4 percent on Nasdaq.

Investment Analysis

(Additional reporting by Doris Frankel in CHICAGO, Kelvin Soh
in TAIPEI, and TOKYO, SEOUL bureaux, Editing by Edwin Chan and
Ian Geoghegan)

UPDATE 4-Intel, global chip shares jump on talk of strong Q1