Intel Corp President Paul Otellini's push to sell more laptop computer chips may be paying off as demand for notebooks surges, prompting analysts to raise their estimates for sales and profit.
Dell Inc and Hewlett-Packard Co, the world's two largest personal computer makers said demand for laptops is rising, prompting analysts such as Mark Lipacis at Prudential Equity and Christopher Danely at JPMorgan Chase & Co to say Intel, whose chips run the machines, may beat their estimates.
Otellini, who was scheduled to take over as chief executive at Intel's annual meeting yesterday in Santa Clara, California, focused on products such as the Centrino laptop chip and cellular-phone processors to help reduce a reliance on PCs.
Craig Barrett, who steps down after reaching the mandatory retirement age of 65, drove profit by speeding up factory output.
"The environment is fairly healthy for Otellini to inherit," said Cody Acree, an analyst with Legg Mason Wood Walker in Dallas who rates the shares a "buy" and said he doesn't own them.
"Notebooks have been more healthy than people have expected," he said.
On May 13 Lipacis raised his estimates of per-share profit for this year to US$1.46 a share, up from US$1.37. He boosted his forecast for sales to US$38.8 billion from US$37.9 billion.
The 54-year old Otellini, who has worked at Intel since 1974, said at the company's analyst meeting in New York on May 5 that the Centrino laptop product allowed Intel to maintain prices and grab more of what consumers pay for computers.
Notebook shipments out of Taiwan in April grew 17 percent, compared with 14 percent normal seasonal growth, according to a May 12 report by Danley.
"This is the first tangible evidence that Intel's business could be ahead of guidance," said Danely, who has an "overweight" rating on the stock that he said he doesn't own.
"Intel gets about a 50 percent average higher selling price for notebooks than it does for desktops," he said.
The market for personal computers, more than 80 percent of which are run by Intel chips, will grow 10 percent this year, slowing to 6 percent growth next year, according to research by Gartner Inc. That means that Intel's sales will grow 11 percent this year and 7 percent next year, according to a survey of analyst estimates by Thomson Financial.
"One of the obvious challenges that Intel faces: is how do you grow?" said Tom Lacey, chief executive officer of International DisplayWorks Inc.
"When you have such a commanding share of a market and that overall market isn't growing at 20 percent to 30 percent a year, how do you grow?" he said.
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