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The Zacks Analyst Blog Highlights: Intel, Altera, Applied Micro Circuits, Lattice Semiconductor and Rambus

Zacks Equity Research

For Immediate Release

Chicago, IL – April 17, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Intel (INTC), Altera Corp. (ALTR), Applied Micro Circuits Corp. (AMCC), Lattice Semiconductor Corporation (LSCC) and Rambus Inc. (RMBS).

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Here are highlights from Tuesday’s Analyst Blog:

Intel Slightly Misses Earnings


Intel (INTC), reported earnings after the bell, posting an EPS of $0.40, missing the Zacks consensus estimate of $0.42.  Moreover, revenues were in line with the consensus numbers at $12.6 billion. 

This earnings release is the first time in 5 quarters that INTC did not have a positive earnings surprise (previous 4 quarters showed an average surprise 9.13% above consensus).  Over the past 30 days, there have been multiple estimate downgrades, showing an overall negative earnings sediment.  Also, analysts are concerned about the companies mobile phone strategy, and the 13.9% year over year decline in PC shipments.    

Another concern is the increase in CAPEX.  In 2012, CAPEX was $11 billion, and 2013 was projected to be $13 billion (CEO Stacy Smith announced, after hours, a revision to 12 billion for the year).  The expenses are designed to invest in core business segments.  
According to Stacy Smith, he believes that INTC is, “well positioned for growth.”  Mr. Smith stated that the transition client category of ultrabooks, convertibles, and android tablets are sources of expected unit growth for the company.  Mr. Smith went on further to state that he is, “OK with top line growth projections, and expects single digit revenue growth for 2013.”  He also pointed out that INTC has recently won 11 phone design competitions, and is the performance leader in third party chips.  

On a positive note, Mr. Smith announced that 40% of their free cash flow has been earmarked for dividends (posting a 4% dividend yield).  Moreover, INTC intends to allocate funds for a stock repurchase.  

In afterhours trading, INTC has declined 0.52%, suggesting that street is still very cautious about future top line, and revenue growth.


Applied Micro Divests Biz to Altera


Leading semiconductor manufacturer Altera Corp. (ALTR) recently decided to acquire TPACK, a wholly-owned subsidiary of Applied Micro Circuits Corp. (AMCC), for an undisclosed amount. The strategic move is aimed at strengthening Altera’s position in the OTN (optical transport network) equipment market that is anticipated to reach $13 billion by 2017, according to research firm Infonetics.

TPACK develops OTN solutions for packet and optical networking equipment suppliers. The company has a long-term business association with Altera since 2007 relating to joint marketing and product development initiatives. The acquisition further builds on their business ties and leverages Altera's 2010 purchase of Avalon Microelectronics, a leading OTN IP provider, to provide customers with flexible, scalable solutions in a dynamic market characterized by changing protocols and evolving standards.

On the other hand, the divestiture by Applied Micro is likely to increase its liquidity as high operating expenses, driven by a nearly three-fold increase in research and development expenditure, led to a significantly high operating loss of $73.2 million in the third quarter of fiscal 2013 (ending Dec 31, 2012).

Headquartered in Sunnyvale, CA, Applied Micro is a premier provider of high-bandwidth low power integrated circuits (ICs), which are essential for the processing, transporting and storing of information. The company provides semiconductor solutions for the enterprise, telecom and consumer/small medium business.

For the telecom and enterprise market, Applied Micro primarily utilizes a combination of design expertise coupled with system-level knowledge and multiple technologies to offer IC products for wireline and wireless communications equipment, such as wireless access points, wireless base stations, multi-function printers, enterprise and edge switches, blade servers, storage systems, gateways, core switches, routers, metro, long-haul, and ultra-long-haul transport platforms.

For the consumer/small medium business, Applied Micro combines optimized software and system-level expertise with highly integrated semiconductors to deliver comprehensive reference designs and stand-alone semiconductor solutions for wireline and wireless communications equipment, such as wireless access points, network attached storage, and residential and smart energy gateways.

Applied Micro presently has a Zacks Rank #3 (Hold). Other companies in the industry that are comparatively better-placed include Lattice Semiconductor Corporation (LSCC) and Rambus Inc. (RMBS), each carrying a Zacks Rank #1 (Strong Buy).


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