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. That's 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 took over as chief executive at Intel's annual meeting Wednesday in Santa Clara, Calif., is focusing on products such as the Centrino laptop chip and mobile-phone processors to reduce a reliance on PCs. Craig Barrett, who stepped down after reaching the mandatory retirement age of 65, drove profit by speeding factory output and expanding in economies such as China.
"The environment is fairly healthy for Otellini to inherit," said Cody Acree, an analyst at Legg Mason Wood Walker in Dallas who rates the shares a "buy" and doesn't own them. "Notebooks have been more healthy than people have expected."
Intel shares, the second-best performers on the Philadelphia Semiconductor Index this year, have gained 17 percent in the past month. The stock rose 23 cents to close at $25.93 Wednesday in Nasdaq Stock Market composite trading.
Prudential's Lipacis on May 13 raised his 2005 estimate for per-share profit to $1.46, up from $1.37. He boosted his forecast for annual sales to $38.8 billion from $37.9 billion.
"We can still continue to be a growth company," Otellini told shareholders at the Santa Clara Convention Center. He said Intel got a head start in markets that are growing faster than the U.S. after he and Barrett cultivated a network of chip distributors that grew to 160,000 last year from 6,000 in 1995. Intel is celebrating the twentieth anniversary of its first office in China, he said.
Of 41 analysts covering Intel in the past year, 27 rate the shares "buy," 12 recommend holding the stock and two have a "sell" rating, according to Bloomberg data. Since the beginning of March, 36 analysts have raised their earnings estimates for this year, and only one has reduced the estimate, according to Thomson Financial.
Intel forecast sales of $8.6 billion to $9.2 billion this quarter. Analysts expect profit of 28 cents a share, the average of 36 estimates in a Thomson survey. First-quarter notebook-processor sales rose 65 percent. Sales of chips for desktops and servers were little changed.
The 54-year-old Otellini, who has worked at Intel since 1974, told investors that the Centrino laptop product allowed Intel to maintain prices and grab more of what consumers pay for computers. Centrino, launched in March 2003, has added $5 billion to the company's revenue, he said.
Otellini plans to push Intel's chips into new products such as cell phones and home electronics.
Intel on Wednesday unveiled a new package of chips for business computers that have more features and less emphasis on counting faster. The new product, which combines a processor and supporting chips, is designed to allow managers of corporate systems to better control their PC networks.
Contributing: Brian Sullivan