Intel aims to get back on track

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Intel plans to showcase it's upcoming computer chips at this week's developers' forum.
SAN FRANCISCO, California (Reuters) -- Intel Corp., reeling from weak sales as it loses share to rival Advanced Micro Devices Inc., hopes to get back on track this week when it unveils faster, more efficient computer chips.

The world's biggest chip maker hopes the fanfare around its twice-annual developers' forum in San Francisco, beginning on Tuesday, will eclipse its Friday revelation that first-quarter revenue will be considerably lower than earlier thought.

The event is a chance for Intel to showcase upcoming chips for business computers, laptops and desktops. It needs to prove that it too can make chips with heaps of processing horsepower but which use less power than previous designs.

AMD, once content to mimic Intel's advances, has set the technological pace in recent years with innovations such as putting two processing cores in a single chip -- moves that have helped it gobble market share from its much-larger rival.

"My expectation is that Intel's new products are definitely going to narrow the gap with AMD, and in some cases may even close the gap," said Nathan Brookwood, head of semiconductor consultancy Insight64.

Analysts expect Intel to focus mainly on chips for the server computers that run corporate networks. Highlighting the importance of that segment, the event's main speech will be by Pat Gelsinger, head of Intel's enterprise business.

The Santa Clara, California-based company will also try to build more buzz around its line-up of microprocessors for laptop computers that form the hottest-selling slice of the maturing computer industry.

"You hear a lot of how the product roadmap is stronger than it ever has been, and this is sort of putting the meat on those bones," Intel spokesman Chuck Mulloy said.

Of course, AMD isn't standing still, either.

The company plans to unveil a chip with four processing cores next year, and analysts say they expect it to show a high degree of integration of the various components, one of the advantages AMD has had over Intel's multiple core chips.

"We think AMD has a 12 to 18 month lead, and we haven't seen anything to change that view," said JoAnne Feeney, an analyst with New York-based investment bank Punk, Ziegel & Co who has a "buy" rating on AMD stock.

AMD's edge has translated into more market share in every segment of the computer industry.

The company had nearly 22 percent of the global desktop market at the end of 2005, compared with 19.6 percent a year earlier, according to market research firm Gartner. In laptops, AMD's share rose to 10.5 percent in 2005 from 8.5 percent in 2004.

AMD's gain has been Intel's loss. After disappointing Wall Street last quarter with lower-than-expected revenue, Intel on Friday warned that revenue in its current quarter would also fall short of initial forecasts.

The company now expects revenue of $8.7 billion to $9.1 billion, down from the earlier range of $9.1 billion to $9.4 billion.

Intel shares have fallen steadily since late last year. Its Friday closing price of $20.32 was its lowest level since October 2004 and 30 percent below a high of nearly $29 hit in July 2005.

Intel stock now trades around 17 times expected 2006 profit, while AMD trades at nearly 27 times.

Reuters.