Ahead of the Bell: Analyst starts Intel at 'Buy'

NEW YORK (AP) _ Intel Corp. is gaining market share over rival Advanced Micro Devices, according to one analyst, who initiated coverage of Intel at "Buy."

ThinkPanmure analyst Vijay Rakesh said Intel is gaining prominence in the server, desktop and notebook markets at the expense of AMD, which has faced some product delays and has been saddled with debt. Earlier this month AMD launched a new package of chips for laptops, hoping to emerge from financial woes.

But Rakesh said AMD is six to nine months behind Intel, and "the lead is solidifying."

Competition between the two rivals has been intense. AMD recently filed an antitrust lawsuit against Intel, saying the company wrongly used business practices to hinder AMD from winning microprocessor contracts with certain computer makers. Intel denied the allegations.

Rakesh said Intel's gross margins are poised for improvement, and its new Atom processor will help drive long-term growth. The Atom processor is part of Intel's plan to come up with new categories of small, inexpensive Internet-connected devices.

Rakesh said the Atom processors have lower average selling prices and gross margins, but are posting good growth.

"While we believe Intel's new Atom processor will not contribute much to the top line in the near-term, it is an emerging growth story," Rakesh wrote in a client note.