Hear That? It's Tech Earnings Season Sneaking In

Earnings season is set to kick off shortly as investors and traders continue to weigh what impact the slowing global economy and domestic macro headwinds will have on the technology sector.

In a report published Wednesday, Oppenheimer analyst Rich Schafer commented that despite negative headlines, he hasn't seen any signs of further deterioration in the technology group. As such, the analyst is expecting the group to post "roughly in-line 3Q results" although with a "downside bias."

"We believe investors anticipate a negative bias to estimates, with less dramatic cuts vs last quarter (think scalpel vs hatchet)," Schafer wrote. "In our view, larger cuts this earnings season could help re-establish investor faith in potential earnings upside. That said, we expect most will opt for more modest cuts given limited visibility."

Here are Schafer's key themes ahead of earnings season.

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RF Content

Schafer stated that RF content remains "one of our favorite" growth themes with companies like Avago Technologies Ltd (NASDAQ: AVGO) and Skyworks Solutions Inc (NASDAQ: SWKS) benefiting from increased iPhone content and potential mid- and high-band PADs in other SKUs.

Automotive

The analyst moved on to automotive, noting that the sector remains "one of the most attractive" end markets over the long term in semiconductors, with content growth outpacing automotive units by a factor of two to three over the next decade-plus.

Freescale Semiconductor Ltd (NYSE: FSL) and NXP Semiconductors NV (NASDAQ: NXPI) are "best positioned," while the sector as a whole is unlikely to be "materially" disrupted from the Volkswagen emission scandal and auto sales concerns in China.

PC Market

Schafer stated the PC market will remain "muted at best" with a 5 percent decrease in units shipped in 2015.

This will weigh on Advanced Micro Devices, Inc. (NASDAQ: AMD), Intel Corporation (NASDAQ: INTC) and NVIDIA Corporation (NASDAQ: NVDA).

China Communications

Finally, there is "little evidence" of a spending uptick within China's communications segment. The analyst did however add that the country (and other large markets like India) are just beginning to move toward 4G, and reacceleration of wireless capex is a "matter of when, not if."

Meanwhile, any pickup in carrier capex before the end of the year (as seen in Q4 2013) would offer upside to names including Freescale Semiconductor, Cavium Inc (NASDAQ: CAVM) and Analog Devices, Inc. (NASDAQ: ADI).

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