Luke says contributing factors to his lower forecast include pricing pressures in lower-end desktop and some server segments and a disappointing response to Microsoft (MSFT) Vista. He maintains an Equal Weight rating on the stock.
Meanwhile, Chris Caso of Friedman Billings Ramsey says he has learned that Intel is planning to cut prices on its quad-core server processors by 30% to 50% on July 7, ahead of Advanced Micro Devices' (AMD) launch of its new Barcelona processor. He wrote in a research note yesterday:
Essentially, these cuts bring quad-core processors to dual-core price points, which will likely be negative for INTC server margins, but would allow it to gain further share. We expect these cuts to delay some of the [second half] margin improvement that we had hoped for. However, we think the price cuts are worse for AMD, as these cuts likely mute the Barcelona launch.
Caso maintains an Outperform rating on Intel with a $25 price target.
Intel yesterday was down 8 cents at $19.26; AMD was up 8 cents at $13.68.
INTC vs. AMD 1-yr chart