Tech stocks: No shine for chipmakers till later in 2012

Tech stocks outlook for next two months is better for semiconductor equipment makers, analyst says. Upgrades to Windows 8 will fuel demand for tech stocks like Intel in the second half of the year.   

Paul Sakuma/AP/File
The Intel sign is shown at Intel headquarters in Santa Clara, Calif., in December. Expect a slow start for semiconductor stocks while inventories are drawn down says a Barclays Capital analyst. But tech stocks like Intel should fare better later in 2012

When it comes to semiconductor stocks, patience will pay off, says C.J. Muse, managing director of Barclays Capital.

 "Inventories will be depleted in the first quarter," he said, adding that Barclays expects this slow start to precede growth for the year from flat to 4 percent across the sector.

 For now, stick with equipment stocks, says Muse, where a different business cycle means inventories aren't an issue, and an overall market lift should carry equipment. 

 Muse likes equipment makers Lam Research and Teradyne.

 "For the next two-plus months we're looking for earnings surprises from equipment and earnings cuts for the semiconductor names."

 But as soon as inventories start to roll in, Muse is betting on semiconductors: QualcommBroadcomMicron Tech, and Altera.

Semiconductor giant Intel is not on this list, despite a pop in the stock late December. "We see the Windows 8 push heading into [the third quarter], impacting PC demand particularly for microprocessors" like Intel, says Muse.

 The third-quarter release of the latest Windows operating system could drive higher PC sales once consumers upgrade their hardware to be more compatible with the new software. This stands to benefit the chipmakers, like Intel, whose component microchips are in the PCs.

 For this reason, Barclays revised its expectations for Intel, saying it expects earnings to be lower in the first half of 2012 than in the second half. 

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.