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Intel (INTC) -2.53%
Intel is set to launch its next chip for servers on Monday known as Nehalem. The 45nm Nehalem microprocessor units (MPUs) feature some of the most important innovations to Intel’s products since the introduction of the Pentium in 1993. New features result in about 2x higher performance over current server MPUs. A Credit Suisse note estimates that Intel is garnering $50-$100 in average-selling-price premiums and conversations with original equipment manufactures and chief information officers indicate extremely positive views on Nehalem.

There has been a lot of concern that Atom (6 percent of 2009 revenue) will cannibalize higher-margin products, marking a long term mix-shift and lower profitability. Nehalem could put some of these concerns to rest due to the potential growth in the server business (currently 18 percent of revenues), which has lofty gross margins near 75 percent.



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Peter Lazaroff, Junior Analyst