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Intel (INTC)
Intel- Chipping Away at the Competition
Intel beat Wall Street expectations with its third quarter performance. Most notably, the chip-manufacturer titan reported a 17% jump in overall sales. Intel is very optimistic that this recent spike in demand is a long term indicator for future growth. It also believes that it is more than capable of meeting the industry's projected 10% growth in personal computer sales. Although Intel is still not where it was a year ago, the company seems to be moving in the right direction. What exactly has Intel so confident about the quarters to come?
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Intel hopes to open a new "window" to the future with Microsoft's (MSFT: Charts, News, Offers) release of Windows 7. The new personal computer operating system is generating a lot of consumer buzz, and the Intel Corporation is anticipating a significant boost in sales as a result, especially in the business segment. The computer chip manufacturer suspects that many companies that passed on the Windows Vista upgrade will now be ready for Windows 7. Intel, along with a majority of its competitors, is hoping that Windows 7 will provide the necessary spark in demand that the personal computer industry needs. However, Intel knows that Windows 7 is just one part of its formula for the future.
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Intel Corporation has experienced considerable success with its recent personal computer price reductions. These pricing cutbacks have generated an increase in sales from both business and private consumers alike. Intel has also seen an explosion in its notebook sales. The consumer demand for mobile computing is climbing at a rapid rate, and Intel is working hard to capitalize on the trend. Intel's Mobility Group reported a 19% increase in revenue during the third quarter. Intel Corporation is benefiting significantly from pricing cutbacks and the popularity of notebook, but it also anticipates this growth to continue. As a result, Intel is very excited about the upcoming holiday shopping season.
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Overall, Intel seems to be pleased with company's future outlook. The upcoming release of Windows 7 is anticipated to rejuvenate corporate sales while still adding value to the private consumer market. Intel is also seeing a strong consumer response with its pricing discounts, and the recent surge in demand for portable computers has been a great boost to sales. However, there is a growing concern that the continued success of the notebook will gradually cannibalize profit from the traditional personal computer market. The fear being that the notebook popularity will drive the traditional personal computer prices so low that the profit margin will practically be nonexistent. Intel is hoping that it has the processing power to overcome these challenges and continue improving company performance.
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