Intel On Deck: Where's the Share Boost?

SANTA CLARA, Calif. ( TheStreet) -- Chip giant Intel ( INTC) will kick off tech earnings season after the market close on Thursday, and investors will be watching whether strong fourth-quarter numbers and new chip technology inject some life into the company's shares.

Despite recent healthy financials and new product launches like its Sandy Bridge chip, Intel's stock has risen less than 1% in the last six months, amid fears that the Windows 7 upgrade cycle has passed.
Intel reports fourth-quarter results after market close

"We expect the company to report a solid fourth quarter and provide strong guidance," said Gus Richard, an analyst at Piper Jaffray, in a note released earlier this week. " But we believe the Windows 7 upgrade cycle is past its peak, and believe year-over-year comparisons will be difficult for calendar year 2011."

Intel is expected to post revenue of $11.37 billion and earnings of 53 cents a share after market close, according to analysts surveyed by Thomson Reuters. In the same period last year, Intel brought in revenue of $10.6 billion and earnings of 55 cents a share. For the first quarter, analysts are expecting revenue of $10.71 billion and earnings of 44 cents a share.

The new Sandy Bridge is likely to feature prominently on the conference call to discuss Intel's results. The 32-nanometer chip, which was launched with great fanfare at CES last week, is being touted by Intel as the next big thing for video and gaming. Speaking at CES, Otellini said that the company already has 500 design wins for devices using the technology.

"We believe Sandy Bridge will be a strong product cycle for Intel in the PC market," added Richard, who has a neutral rating on Intel. "However, the product is not likely to drive the shares significantly higher or materially increase estimates."

Intel also reports its results at time of uncertainty in the broader semiconductor market. After working through their inventories in 2008 and 2009, semi companies ramped up their sales in 2010, although tech research firm Gartner has predicted a slowdown in 2011.

Intel CEO Paul Otellini, however, is expecting a strong PC and server market in 2011, with Windows 7 still acting as a major catalyst.

Gartner's fourth-quarter PC numbers, released Thursday, paint something of a mixed picture of the spending environment. Overall, holiday PC sales to consumers were weak, it said, although the corporate market enjoyed healthy growth.

Intel may also shed some light on its smartphone strategy during its conference call. The tech bellwether is a relative latecomer to the smartphone space, where it faces stiff competition from the likes of Qualcomm ( QCOM). Intel is expected to launch its Medfield smartphone chip this year.

The chipmaker, which recently paid Nvidia ( NVDA) $1.5 billion to settle a patent dispute, is also scrambling to make its presence felt in the booming tablet market. Otellini will likely to face questions on longstanding partner Microsoft's ( MSFT) recent decision to work with Intel rival ARM ( ARMH) for its Windows operating system.

Shares of Intel, slipped 3 cents, or 0.16%, to $21.27 in early trading on Thursday, as the Nasdaq dipped 0.07%.

--Written by James Rogers in New York.

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