IBM: Citi was blown away by IBM’s quarter, in which strong hardware margins and a better than expected product mix delivered over a billion dollars of upside. Credit Suisse was also optimistic, suggesting that IBM would benefit from lower tax-rates and pension costs. Citi reiterates “buy,” jacks target to $146.
Seagate (STX): Citi raises March and FY08 EPS estimate to $0.65 and $2.74, respectively. The boost comes from Citi’s confidence in the firm’s “tight discipline” in terms of capacity expansion through continued consolidation.
Advanced Micro Devices (AMD): Both Credit Suisse and Citi slashed targets for AMD; Citi to $8.50 from $10 and CS to $7 from $16.50. Citi cited concerns with “compression in comparable multiples and lower estimates.” This came in spite of improved Average Selling Prices (ASPs) and gross margins, which apparently won’t be enough to offset the coming macro downturn. AMD management and Citi disagree about the outlook for the chip market, with AMD forecasting 15% y/y growth and Citi insisting on a more conservative 9%.
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