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Intersil Forecasts Weak 3Q Revenue

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Intersil Corp. (ISIL) expects weak sales for the third quarter of 2012. Following the news, the company’s shares fell 2.28% to $6.86 after the markets closed on Wednesday.

The chipmaker expects third quarter net sales to be $151 million, representing a decline of 7% sequentially and 19% from the year-ago quarter. According to FactSet, analysts currently expect Intersil to report revenue of $159.7 million in the upcoming quarter.

Management expects revenue to decline on account of weakness in the personal computing business worldwide.  The PC market represented approximately 25% of the company’s second quarter revenue and increased 2% sequentially from the prior quarter.

The weakening PC sales in the corporate market are a sign of a technological shift, driven by the growing popularity of smartphones and tablet computers. We believe that Apple’s (AAPL) iPad and other tablets will continue to eat into notebook sales.

The popularity of tablets is definitely one of the chief factors resulting in a weak PC market. We believe that the release of Windows 8 will not be a major help to the ailing PC market in the near term as businesses tend to be conservative when it comes to upgrading Windows.

Market research firms, Gartner and IDF estimate that shipments of traditional computers were down 0.1% from the comparable prior-year quarter to 87.5 million units in the second quarter, when Intel's IvyBridge processors and Ultrabooks were supposed to revive the PC market, indicating a weak PC market ahead.

Intersil is one of the leading producers of mixed-signal integrated circuits for applications in the industrial, computing, consumer and communications markets. In the second quarter, Intersil’s results were impacted by weak demand in the consumer markets.

However, the industrial and infrastructure markets showed improved sales contribution compared to the year-ago quarter. The company expects to report its third-quarter results on October 24.

Currently, Intersil has a Zacks #3 Rank, which implies a Hold rating in the short term (1-3 months).

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