Intel Seeks Growth Beyond Computers

Steven Halpern

posted: 42 DAYS 9 HOURS AGO

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Paul McWilliams was one of the few to not be surprised by the upside surprises in recent quarterly earnings reports from Intel (NASDAQ: INTC), as he has been consistently more bullish than others on Wall Street.

In his Next Inning, the tech stock specialist -- who personally owns a position in the stock -- offers a detailed and in-depth review of the firm's latest results and outlook.

"For the first time in what now seems like at least a year, not a single analyst on the Intel conference call asked about whether netbook sales were 'cannibalizing' notebook sales.

"While refreshing, based on what seemed to be on the analysts' minds during the Q&A session, I don't think we should take this as a sign that Wall Street has finally come to grips with the real INTC story; a few paragraphs, yes, but the whole story, no.

"Oh, don't get me wrong, no one could misinterpret the point that INTC made abundantly clear, in spite of the fact that the company shipped nearly half of its year-to-date netbook Atom revenue in Q3, sales of notebook processors and chipsets still posted higher growth during the third quarter.

"Heck, that was even an upside to my expectations. However, that's just the tactical side of the story; the much more important strategic side to this story still appears to be an enigma to Wall Street.

"While the netbook market is important for a number of reasons, including the fact it has generated over $1 billion in revenue during the last three quarters and has opened personal computing to consumers in emerging markets with its low entry prices, those aspects of the first generation Atom processors are more tactical than strategic.

"The larger strategy will unfold during the coming year as INTC leverages the experience and economy of scale it has gained through the creation of the netbook market with its new 32nm fabrication technology to produce its first low-cost System on a Chip (SoC) devices that I believe will open new markets outside the personal computer sector.

2009-10-15 19:03:56