Intel Corp (INTC)

[VeeCee]

Current thought process on part of analysts.
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Intel already said its second-quarter results will be better than expected. Now the question is whether the good times can last.
The big maker of computer processors has been suffering as consumers shift their spending to smartphones and tablets - - markets where Intel chips have been largely ignored by hardware makers.
But businesses have stepped up their PC buying, Intel said in mid-June. The company projected it will post $700 million more in revenue than it previously expected--Intel's first positive revision to its financial forecast since the third quarter of 2009. Analysts now expect per-share earnings of 52 cents, up about 33% from a year earlier, on $13.7 billion in revenue, a rise of about 7%.
One often-cited factor is Windows XP, Microsoft's long-outdated operating system. Microsoft ended technical support for that product in April, prompting many companies to finally upgrade their PCs to run more recent versions of Windows.
With that lift now factored into Intel's share price, investors will be watching the company's third-quarter guidance Tuesday and other comments that might indicate whether the PC buying binge will continue.
"Really the important issue going forward is how sustainable is that enterprise PC improvement," says Brian Fox, senior vice president and portfolio manager at Standard Life Investments, who oversees investments that include Intel shares.
Intel reports earnings after the close of New York trading Tuesday, and will hold a conference call at 5 p.m. ET. Here are some more things to watch:
Move to Mobile: Intel has been spending heavily to catch up in chips for mobile devices, offering subsidies to tablet makers that switch from chips based on ARM Holdings technology. While the red ink in that segment is bound to have recurred in the second quarter, a rise in revenue for that business would be a welcome shift.
Server Success: Intel's share of chips sold for servers recently reached 97%, and the cloud-style services offered by the likes of Google and Amazon.com have bolstered revenues. But Fox said investors would like to see double-digit percentage growth in that data center business in the second period--not a sure thing as other corporate buyers focus more on using their existing hardware more efficiently.
Rise of the Things: Intel last quarter for the first time broke out revenue from one of CEO Brian Krzanich's newest priorities: selling chips for an array of non-computer devices that are sometimes lumped together as the Internet of Things. Revenues rose a healthy 32% for that segment in the first quarter; analysts would like to see more signs that the new field isn't just a fad.
More from Moore: Intel prides itself on shrinking chip circuitry every two years or so, a cadence of technology improvement called Moore's Law, named after company co-founder Gordon Moore. But the latest generation of chips based on new technology are about six months late. Signs of a firm arrival date for those new processors would help bolster confidence in Intel's position.
More at The Wall Street Journal's Digits blog, http://blogs.wsj.com/digits/