More domestic supply-chain companies in the PC sector may revise downward their full-year shipment and earning guidance over the next month, following Intel Corp’s revenue guidance cut this week, Daiwa Securities Co Ltd said in its latest research report on Wednesday.
Under these conditions, the brokerage house says it prefers stocks in PC original equipment manufacturers (OEMs) that have more exposure to emerging markets and the commercial sector, such as Acer Inc (宏碁) and Lenovo Group Ltd (聯想).
Intel, the world’s largest chipmaker, revised downward its annual revenue growth target for this year to between 3 to 5 percent, from about 10 percent, due to a pick-up in demand from developed markets being slower than expected.
“Taiwan’s PC OEMs and ODMs [original design manufacturers] are likely to follow as current guidance for the second half of this year is still too high,” Christine Wang (王琦清), an analyst at the brokerage house, said in the report.
Inventory in the supply chain is being kept to a minimum ahead of the launch of the Windows 8 operating system which is scheduled for October, Wang said, citing Intel’s views.
Therefore, the brokerage house expects notebook PC shipments for the third quarter to be lower than the seasonal average, with a growth rate of only 8 percent compared with a year earlier which compares with a 15 to 20 percent growth usually seen during the peak season.
This may prompt Taiwanese OEMs and ODMs over the next few weeks to revise down their notebook PC shipment growth guidance, further dragging down their profitability, the report said.
Although Intel expects Ultrabooks to trigger autumn demand, Daiwa said pricing remained the major issue, with market researchers finding most Ultrabooks still retail for more than US$1,000.
In addition, the brokerage house forecast that the Ultrabook and Windows 8 OS will make a perfect match to trigger demand, as Microsoft Corp is clearly targeting the tablet and converged-device markets, which is likely to cannibalize the Ultrabook market.
Daiwa maintained a relatively optimistic view on PC brand stocks that have higher exposure to commercial demand, including Acer and Lenovo, as current PC business demand is more robust than consumer demand.
In addition, spending on the PC sector by small and medium-sized enterprises may hold up well, the brokerage house said.
However, the firm took a negative view on Asustek Computer Inc (華碩) and remained pessimistic about the company’s exposure to the tablet market, which is facing intense competition.
For Taiwanese ODMs, Daiwa said Wistron Corp’s (緯創) overall business may be dragged down by the downside risks of its customers Research In Motion Ltd (RIM) and Sony Corp in the near term, while Quanta Computer Inc’s (廣達) valuation has been too high.