Ahead of the Bell: Intel posts strong 4Q

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NEW YORK (AP) — Intel Corp. “delivered on high expectations” when it posted better-than-expected earnings for the fourth quarter, but the chip maker could face challenges in 2010 as demand for desktop computers slows, an analyst said Friday.

Jefferies analyst Adam Benjamin said pricing pressures could also weigh on Intel, the world’s largest maker of microprocessors, the “brains” of computers. That’s due to ongoing demand for cheaper, low-end laptops, which bring in less money.

The analyst, who rates Intel “Underperform,” said the company’s stock price and Wall Street’s estimates “already reflect expectations for an enterprise upgrade cycle.” That means he thinks investors already know personal computer spending will get a boost this year because of businesses and government agencies replacing outdated models.

Benjamin raised his target price to $17 from $15.

Overall PC shipments grew more than expected in the fourth quarter, a sign of recovery after a brutal 2009.

Intel, based in Santa Clara, Calif., earned 40 cents per share in the latest quarter, up from 4 cents per share a year earlier. Analysts polled by Thomson Reuters expected a profit of 30 cents per share. Revenue climbed 29 percent to $10.6 billion.

Kaufman Bros. analyst Suji De Silva kept a “Buy” rating and a $25 target price on Intel. The analyst called the quarter’s results “robust.”

“We see willingness of customers to purchase higher-end servers and notebooks despite economic conditions as a positive indicator of the strength of (Intel’s) product offerings,” De Silva wrote in a note to investors. “We expect this strength to continue into 2010.”

Intel shares rose 7 cents to $21.55 in premarket trading.