Wednesday, March 31, 2010

Intel $30 Price Target $INTC [credit suisse] Nehalem EX Launch For High-End Servers

XeonNehalem EX Launch For High-End Servers
Reiterate OP. Our $30 PT represents a 15x P/E multiple to our $2.00 earnings power est. for this cycle.

Bottom Line. INTC today introduced Nehalem EX targeted towards high-end  and mission critical UNIX servers in San Francisco today. This combined with a powerful Westmere EP performance/power efficiency driven server consolidation cycle in mainstream servers, our positive view on global PC penetration growth, and a cyclical recovery in corporate PC/server spending provide significant cushion to our $2+ earnings power this cycle.

Nehalem EX Introduced. INTC today introduced Nehalem EX based Xeon 7500 server MPUs targeted towards higher-end ($15-20K+) UNIX servers. The 8 core and 16 thread 45nm chip come in 4 and 8 socket configurations with ASPs ranging from $2,000 to $3,500 (vs. overall server ASPs of $520). Nehalem's modular approach also allow OEMs the option to configure sockets (up to 256), memory (up to 1TB in 4S) and I/O to bring out custom products addressing the entire spectrum of the server market. Intel's server partners DELL, HPQ, IBM,

CSCO, ORCL (Sun Micro), Cray, NEC and others are expected to begin shipping servers systems with the new chips almost immediately.

Entry Into Mission Critical Servers. x86 servers represent 93% of servers, but only 58% of server revenues. Nehalem EX allows INTC to address more of the Unix market where ORCL (Sun) and IBM with their proprietary hardware have a 65% share and expand INTC's server microprocessor TAM from $7bn currently to $10bn+. Unix consolidation is second only to virtualization among IT manager priorities as it provides significant cost savings.

Nehalem EX Launch For High-End Servers

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