Specifically, checks suggest that Intel benefited from a stronger uptake of Core 2 Duo mobile processors (Merom), as well as stronger momentum in servers (driven in part by share gains versus AMD). Given the strength in notebooks & servers they expect Q4 gross margin to benefit from improved mix. Consequently, they expect Q4 GAAP gross margin to clock in at ~52% vs. the mid-pt of guidance of 50%. Finally, from a geographic standpoint, most of the strength was witnessed outside North America, with Europe & APAC exhibiting relative outperformance.
The firm is raising their above-consensus 4Q rev. est. to $9.6b, and tweaking GAAP EPS est. higher to $0.27 (Street: $0.25). Firm's new CY07 GAAP EPS est. of $1.27, up from $1.25, remains comfortably above consensus ($1.11). They note that this marks their 2nd upward rev. to Intel's est. in less than a month.
Maintains Buy and Top Pick status. Tgt $28.
Notablecalls: Most certainly 'good to know' category. I would not be surprised to see some buy interest in INTC early on as it looks like INTC is regaining some ground vs AMD.