Intel: New Line Delayed, But Gaining Market Share - JP Morgan

Includes: AMD, INTC
by: Eric Risley

Intel’s (NASDAQ:INTC) new line of processors code-named Nehalem is being delayed, J.P. Morgan chip analyst Christopher Danely asserted this morning. Danely notes that Intel said at its March analyst day that the chip would roll out in the second half; but he says it now appears the company “will struggle to release even two of the four products” in the line. He says a dual-processor server product and a high-end desktop chip will launch in Q4, while the laptop and multi-processor versions will not be released until Q1.

Meanwhile, Danely says the company continues to gain market share against Advanced Micro Devices (NYSE:AMD), despite AMD’s launch of its Puma laptop platform. Danely says Intel’s market share gains in laptops “bode well for both revenue and margins in the near term, since Intel derives a higher than corporate average price and gross margin for laptop chips.” For that reason, he thinks Q2 results are tracking above the mid-point of the company’s guidance.

Danely upped his 2008 revenue estimate to $40.4 billion from $40.1 billion; he now ses profits of $1.30 a share, up from $1.26. For 2009, he now sees $43.2 billion and $1.48 a share, up from $42.8 billion and $1.47.

Danely keeps his Neutral rating on the stock, citing concerns about PC demand, the Nehalem delays and potential downside to 2009 first half estimates due to start-up costs for 32 nm production buildout. He says that the stock, at 17x 2008 his 2008 EPS estimate, “is not cheap,” at the midpoint of the stock’s 15-20x EPS range.