These should be happier days for

Intel

(INTC) - Get Report

.

A week ago, the microprocessor maker

said that it expects second-quarter revenue to come in as expected, which makes this so far the first quarter in a year in which Intel hasn't warned. The reason? The microprocessor market, and thus the personal computer business, has returned to normal seasonal patterns, Intel says.

But instead of boosting the stock, Intel's relatively upbeat talk has left its shares languishing. Investors, it seems, simply have great doubts about Intel's statement that it expects a better second half, particularly because comments from PC makers appear to contradict what Intel is saying. And with no signs of a PC pickup, investors are growing impatient.

All that makes investing in Intel a somewhat uncertain bet in the short term. For instance, Venu Reddy, a technology analyst at mutual fund company

Waddell & Reed

, believes the stock will fall further. (His firm has no position in the stock.) The shares are off 9% since last Thursday, when Intel held its

midquarter update, and are off about 7% since the end of 2000. They've given up 57% from a year ago.

PC makers from

Compaq

(CPQ)

to

Hewlett-Packard

(HWP)

say that sales remain weak.

Dell

(DELL) - Get Report

goes so far as to say it doesn't see business picking up until perhaps after October. And the way the supply chain works, PC manufacturers have to produce more boxes to need more chips.

A Different View?

Of course, Intel's description of business conditions isn't as detailed as the PC makers, offering only a general view on how demand could develop. Seasonal patterns, for Intel, mean a second quarter that is weaker than the first and a second half that is better. "Based on ordering patterns that we've seen, as well as historical trends, we believe that we will see a seasonally stronger second half," said spokesman Tom Beermann.

But there even are questions about whether PC makers will see a stronger second half. A turnaround hinges on back-to-school buying,

Microsoft's

launch of its new

Windows XP

operating system in October and then Christmas buying. "Sales are still very weak, and there's really nothing that's likely to motivate people to buy until August -- until back-to-school gets into full swing," says Stephen Baker, a director of research at

NPD Intelect

, a market research firm in Port Washington, N.J.

However, neither season produced much in the way of PC sales last year. And it's unclear whether computer users will feel a need to upgrade to Microsoft's new product. So faith that the year's second half will be better than the first is based on historical trends rather than large orders or even pending large orders. The first fourth months of the year have been poor indeed -- PC sales are off 20%, according to NPD Intelect.

"It's still concerning that PC demand

isn't really picking up. Maybe people are buying ... here a little, there a little, but in the United States, at least in the retail channel, business is still weak," says Reddy at Waddell & Reed. U.S. retail is about 12% of the global market, he explains.

The Business Market

There is some sign of stabilization in the enterprise, or large business, market, which makes up about 50% of PC consumption, Reddy says. But it's not clear to him if it has much staying power. "We're starting to see some signs of stability, but we're not sure yet if it's real, or if it's a head fake," Reddy says.

The main problem for the stock stems from what PC makers are saying. Hewlett-Packard, which makes PCs, last week gave its

fifth warning this year, saying that weak consumer and corporate sales had spread from the U.S. to Europe and Asia. Dell doesn't expect to see a recovery in the third quarter and only a mild uptick in the fourth quarter based on macroeconomics and corporate buying.

Of course, company-specific issues could be clouding the picture. The PC makers, for instance, are battling it out for market share. During the first quarter, Dell took the market by storm, growing 30% while the rest of the PC makers showed flat or negative sales, Martin Reynolds, a research analyst at

Gartner Dataquest

explained.

But, competitive issues aside, what computer makers are saying is catching the attention of investors more so than what Intel's saying. That's because a computer company is closer to demand than a semiconductor maker.

The Chain

The supply chain works like this: The consumer buys a PC from a retail store like

CompUSA

, which purchased it from a company like Compaq, which ordered a microprocessor from Intel. Or in the case of direct manufacturers like Dell, the consumer buys directly from the company.

To prepare for Christmas sales, for instance, some PC makers will order chips and build machines months ahead of time. But while that removes the PC maker a bit from real demand, Intel is always further up the supply chain.

"Inherently H-P is closer to the end market than Intel is," explains Dan Scovel, a semiconductor analyst at

Needham

. "Intel would be a more comprehensive view of the market, but you have to handicap that out because they're an upstream supplier. Things could be really crappy and Intel wouldn't really know it, or would be a slight lagging indicator to know it." (Needham hasn't done any underwriting for any of the companies mentioned.)

That gap, it seems, is making Intel too risky a bet for some investors.