Intel: Street Upbeat on ‘Romley’ Prospects

The Street today is responding to yesterday’s presentation by Intel (INTC) at the New York Public Library of its “Romley” server line of microprocessors, unveiled in San Francisco earlier this month under the official name of the “Xeon E5.”

In the Trustees Room in the old Beaux-Arts building on 42nd Street and Fifth Avenue, Intel’s Data Center chief, Diane Bryant, a 25-year veteran, held meetings with a handful of press before addressing analysts. Bryant has been on the job only a few weeks, but displayed a firm grasp of the big picture and the particulars.

Fun factoids: Bryant hosts a “Texas Holdem” tournament for Intel staff every year at her home. Also, the Sacramento native was responsible for design of the “IO Buffer” in the 486 microprocessor — all six transistors of it — back when she was a fresh young UC Davis Double-E graduate.

(And an Itanium fun factoid: Did you know the high-end server chip is used to run all of Intel’s manufacturing operations, such as tracking the movement of wafers through the fab? Intel remains “very committed” to Itanium, Bryant told me.)

The Street seems largely enthused about the presentation.

Stifel Nicolaus’s Kevin Cassidy this morning reiterates a Buy rating on Intel shares and a $34 price target, writing,

We came away from the event convinced Romley could be Intel’s most successful server/storage/networking processor yet. Importantly, we expect Intel’s next server-class CPU based on the same architecture though on the 22nm process could surpass Romley in performance and revenue.

Credit Suisse’s John Pitzer this morning reiterates an Outperform rating on shares of Intel and a $35 price target, writing that the Data Center operation is “not your grandfather’s server business”:

OEMs had over 400 designs set for volume deployment across Server, Storage and Networking which is 2x the amount of Nehalem; 2) 100 of those 400 designs (25%) were in Comms Infrastructure vs. low single digit % for Nehalem; and 3) those 100 designs can now target the Application, Control and Data planes of the Networking market vs. largely just the Control plane with Nehalem. To sum it up, INTC�s Server chip business is NOT just a play on Enterprise Servers (2% unit CAGR), it is a levered play on robust growth in Networking (40% CAGR), Storage (20% CAGR) and the Cloud (30% CAGR).

Intel shares today are down 8 cents at $28.08.

Fin