Intel's Montecito Itanium Chip -- Implications for AMD, INTC, HPQ, SGID, SUNW, UIS

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

Intel's Itanium Comes to Key Point

• Summary: Intel will tomorrow introduce the latest in its 64-bit Itanium family, a duel core processor called Montecito. The new chip contains over 1.7 billion transistors but consumes only 100 watts, down from 130 for earlier models. Itanium-based systems are best suited to high-end task involving large database transactions, such as financial institutions. The number of Itanium-based systems sold in 2005 fell slightly year-over-year to 8,182, though revenue from those systems rose 42% to $640 million. HP accounted for over 80% of Itanium system sales in Q1. Other systems vendors who use the chip include Silicon Graphics Inc., Unisys Corp., NEC Corp., Hitatchi Ltd. and Fujitsu Ltd. Unlike AMD's Opteron chip and Intel's x86 processors, however, Itanium can't run software designed for 32-bit systems such as Windows and some versions of Linux. EMC's VMware unit has decided not to support Itanium.
• Comment on related stocks/ETFs: The rollout of Intel's new processors -- including Montecio -- is incrementally positive for Intel's stock (INTC), particularly given the level of negative sentiment. Probably insignificant impact on AMD's stock (AMD) as the Itanium market is too small to impact AMD. HP (HPQ), although it dominates the Itanium-based systems market, also has too little revenue exposure to be affected by this. Unisys (UIS) and Silicon Graphics (SGID), due to their focus on high-end systems, may get more leverage from the new products. Sun Microsystems abandoned its proprietary-chip-only approach (it now uses AMD chips in some of its servers) and would use Montecito if it was truly compelling, so probably no competitive impact for Sun's stock (SUNW).