Over the past quarter, a few sectors have stood out as the biggest winners of the summer stock market surge. While materials and service firms were both big gainers, technology companies rose sharply as investors bought up the sector due to its high growth prospects and increasing demand in emerging markets. However, despite these gains in the broad tech sector -- which saw Apple and Oracle both surge by more than 17% and Verizon jump by 24.5% -- the semiconductor industry experienced weakness as National Semiconductor Corp. plunged by close to 10% while chip giant Intel
The company looks to extend its estimate-beating streak to five consecutive quarters by posting profits better than the current estimate of $0.50 a share on revenues of $11 billion, which compares to profits of just 33 cents a share on $9.39 billion in revenues for the same period last year. While this represents a robust increase, investors will likely focus in on the company's guidance for the holiday season as well as the company's plans to tap into the ever-growing mobile computing market. Although demand may be sharply increasing for chips, supply is running dangerously high as well; according to research firm iSuppli, inventory levels of semiconductors currently stands at 75.9 days of inventory, or $34.3 billion worth of chips. If companies cannot find a way to burn this off in the holiday season, it could lead to a price war in the first quarter of 2011, which could significantly weigh on Intel’s bottom line in the near term [see ETFs To Play A U.S. Export Boom].
Investors will also be curious to see how Intel plans to integrate the recently-purchased security software firm McAfee
Because of Intel's earnings report, the Merrill Lynch Semiconductor HOLDR
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