What to Expect from Intel

By Scott Ferguson  |  Posted 2008-04-14 Print this article Print


While Intel's overall financial health is better than AMD's, and it has been able to deliver a steady stream of new products in the past six months, there are some problems, too.

In March, the company announced that it is expecting lower gross margins within its NAND flash memory business, which could put a dent in the bottom line. The overall NAND and DRAM (dynamic RAM) market is suffering due to oversupply.

With AMD's sales off this quarter, analysts will look to see if OEMs turned to Intel to pick up the slack, especially on the server side, and, in turn, boost the company's profits. If not, it could show that the overall market for PCs and servers has begun to slow down as the U.S. economy continues its sluggish pace.

In a meeting with analysts in March, Intel executives told their audience that much of the company's business now comes from overseas, with should lessen its reliance on the U.S. market.

Roger Kay, an analyst with Endpoint Technologies Associates, said some of the recent news out of Taiwan might indicate that the PC market remained fairly stable in the first quarter despite the usually seasonal downturn. This could help Intel meet its quarterly expectations.

One reason the market has remained stable is that there is still a demand for notebooks, which continue to drive the market. If that's the case, Kay said, he believes that the industry will have to wait until the second quarter or later to really determine whether the PC market is suffering along with the economy.

"Right now, I think there is enough demand that the PC market will hold OK for now," Kay said. "I do think the computer industry will sustain some aftershock if the other economic shoe drops. I think if that happens, you'll see it show up more in the second quarter."

McCarron said he does not believe Intel will detail any new products during its first-quarter disclosures, as the company just held its spring Developer Forum in China earlier in April. However, Intel could discuss its plans to ramp up its line of Atom chips for mobile Internet devices and low-cost notebooks.

"Intel might talk a little more about 'Silverthorne' and 'Diamondville,' and if they are not in full production right now, I expect them to start ramping those chips up for production very, very soon," McCarron said. "Intel could also give an update on its overall 'Penryn' [45-nanometer] line."


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