No Earnings Warning From Apple or Intel, Despite Slow Chip Sales (AAPL, INTC)

What happened to all the warnings? Ask investors, as the second quarter draws to a close with almost no substantial warnings to speak of, and certainly none by leading companies.

Two leading companies, Intel Corporation (Nasdaq: INTC), and Apple Computers (Nasdaq: AAPL), were the candidates expected to publish profit warnings during the quarter, but analysts now believe the chances of this happening are almost non-existent. Smith Barney analyst Glen Yeung says that Intel has never published a profit warning after a quarter has ended, and he therefore believes it is not likely to publish one now.

On the other hand, he notes that figures for sales of computer microprocessors in April and May show a fall of 20% compared with the first two months of the first quarter of 2006, and says that June would have to be a very strong month in the microprocessor field for both Intel and Advanced Micro Devices Inc. (AMD) to meet the forecasts.

Although he does not cover Apple, Yeung believes that perhaps the reason that neither Intel nor Apple have issued warnings has its origins in the same factor: strong sales of new computers for the first time have been built around the Intel microprocessors that Apple launched at the beginning of the second quarter.

This apparently ensured that Intel had a strong month in June, which compensated for the weak months in April and May, while improving Apple’s quarter, which had been weak because of low sales of iPods. Of course, this entire theory could be shattered if one or both companies issue warnings after all, although Apple is not likely to hit investors again, two days after it announced on Friday that it too had irregularities in its options allocations.

Published originally by Globes [online], Israel business news - www.globes.co.il
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.