By Ian Sherr

SAN FRANCISCO (Reuters) – To get accurate projections for Intel Corp, Wedbush Morgan analyst Patrick Wang often finds himself hopping on a plane to Asia.

Wang — who normally crafts complex mathematical models and pores over financial statements — finds, in Intel’s case, it helps to use his fluent Chinese to gather information directly from its customers: top computer manufacturers in the Orient.

“They’re just such a large semiconductor company and to get color in terms of the overall scale, you need that,” he said.

Wang and many other analysts’ predicament may underscore why the world’s top chip maker has beaten expectations in six of the last eight quarters. More than 80 percent of its sales are abroad. Analysts estimate over half its revenue comes from less transparent markets such as China, Africa and India.

Many analysts rely on “channel checks” — surveys of vendors and distributors to gauge supply and demand — but Intel’s case is further complicated by the preponderance of “white-box” manufacturers in those emerging markets: local mass producers of unbranded computers.

Unlike more developed markets such as North America and Europe, where large computer manufacturers release regular sales numbers, many Asian, African and South American countries are dominated by smaller local players.

Intel estimates white-box outfits buy 25 percent to 30 percent of all the chips it sells each quarter.

On April 13, Intel is expected to post $9.80 billion in revenue, and earnings of roughly 37 cents per share, excluding items, in the first quarter of 2010, according to Thomson Reuters I/B/E/S.

“There are countries that analysts tend to overlook because you only have a finite amount of time,” said Real World Technologies analyst David Kanter. “It’s hard to get information there because you’re not going to go to Brazil to talk to a bunch of white-box vendors.”

Yet that’s exactly what many, like Wang, have to do.

RISING DEMAND, LOWER CLARITY

According to Thomson Reuters Starmine, an earnings surprise is likely in the first quarter. Starmine’s SmartEstimate, which places more weight on recent forecasts by top-rated analysts, predicts Intel will post earnings per share about 1 percent above the Street’s average projection.

Demand is rising for computers as more of the world comes online. But many of the Internet’s newest entrants are in locations remote enough that larger manufacturers haven’t yet established a presence, so their market is instead flooded with small generic manufacturers — the veritable black hole of sales into which analysts rarely see.

“It’s so diverse and there are so many different channel players in all different segments in so many different countries, and that’s what makes it complicated to put a sticker on,” admitted Maurits Tichelman, Intel’s director of channel sales.

Markets tend to become easier to read as the industry develops. Insiders at both Intel and Advanced Micro Devices Inc say consumers in developing markets tend to prefer white-box computers, but as their quality of life improves, so, too, does their hunger for portable devices.

Laptops tend to be the domain of major brands, so visibility into sales channels typically improve. Companies like Hewlett-Packard Co, Acer Inc, Toshiba Corp, Dell Inc and Apple Inc all report data that help analysts peer into Intel’s sales volumes.

But if multinationals don’t — or can’t — immediately move in, dominant local players rise instead. After all, Intel’s Tichelman said, Lenovo Group started as a local Intel partner in China; now it’s the world’s No. 4 computer maker.

IDC analyst Shane Rau said the sheer size of the Chinese market, and the country’s own efforts to build as many computer parts as possible within its borders, is leaving another opportunity for surprise.

IDC employs dozens of analysts on the ground, providing first-hand knowledge of the market. But if demand were to surge or drop abruptly, analysts could still miss it, he said.

“There are so many little channel players out there that it’s not entirely clear where all the processors are going.”

Hence Wang’s willingness to cross half the globe from his base in New York to Shanghai.

On a chilly November day in 2009, the 29-year-old sat in a taxi in bumper-to-bumper traffic, preparing for a meeting with product managers for several distributors and, of course, an appointment with Intel.

But even that may not be enough.

“There’s no way to get a good cross section of how those sales are doing,” he said. “You’ll never get a full picture of things.”

(Editing by Edwin Chan and Richard Chang)

(Originally published Sunday, March 28 on the wire at Reuters News, here.)

By Ian Sherr

SAN FRANCISCO (Reuters) – ANALYSIS – When Apple Inc unveiled its iPad last month, one crucial detail almost got drowned out in the hoopla: the new tablet computer will be powered by an in-house chip called the A4.

While Apple likely will not market the chip publicly, analysts say the new processor underscores how rival chip designs may eventually win out over Intel Corp’s designs in the emergent hot category of mobile devices like smartphones and tablets.

Intel says the first smartphones using its chips go on sale by 2010′s second half, as it tries to stake out a corner in the wireless market and replicate what it did for the formerly red-hot netbook category it now almost completely dominates.

But analysts point to an uphill battle against Nvidia Corp, Marvell and Qualcomm Inc, already making headway with cheaper, low-power processors based on designs by ARM Holdings PLC.

“They (Intel) don’t have a track record in delivering these types of chips,” said Wedbush Morgan analyst Patrick Wang. “They haven’t been successful in the past, and they’re trying to get in.”

Not much is known of the A4 — the brainchild of Apple design teams including recently acquired PA Semi — except that it gives the iPad a long battery life and is considered comparable to rival processors in both speed and performance.

That Apple went its own way illustrates how specialized chip design may be more suitable for the burgeoning mobile market than Intel’s do-everything approach.

The difficulty, analysts say, is Intel keeps trying to leverage its x86 technology, on which the more powerful processors that drive eight out of 10 personal computers worldwide is based.

“If you look at the stuff Intel’s put out there at previous press events and developer forums, you see mobile Internet devices that are kind of clunky, really thick, low-battery life type of devices,” Wang said. “They’ve been worried.”

Intel-based tablet laptops have been sold without huge success for nearly a decade. Apple uses Intel chips in its Macintosh personal computers and servers.

A NEW FRONTIER

Since 2007, Intel has been making a strong push into mobile devices with processors designed specifically for wireless products like netbook PCs and handheld Internet gadgets. Its Atom mobile chip began selling in 2008, and has taken the low-cost, no-frills netbook market by storm, powering tiny computers just enough to run Microsoft Corp’s Windows system to check email, surf the Web, and create documents.

But with analysts predicting slowing netbook sales growth, Intel wants to convince device makers that its chips are the best bet for the new breed of handheld gadgets.

And there is a reason: at an investor meeting in May, Intel Chief Executive Paul Otellini said the smartphone chip market and the low-cost netbook chip market each will amount to $10 billion in 2011.

To date, Intel has sold just shy of 55 million chips for netbooks and other mobile devices. About 3 million were targeted at handheld Internet products, although Mercury Research analyst Dean McCarron said many of them most likely ended up in low-end netbooks instead.

Now Apple’s iPad is expected to cement consumer demand for a new class of tablet-style computers and e-readers. IDC analyst Bob O’Donnell said his firm predicted Apple will sell 3 million to 4 million iPads this year compared to an estimated 35 million netbooks and 165 million notebooks expected to be sold in 2010.

But sales of mobile Internet gadgets like tablets are expected to leap several-fold over the course of coming years — an emerging battleground for chipmakers.

Nvidia recently became popular for this new generation of mobile devices with its Tegra platform, which offers graphics married to a processing brain based on designs licensed from ARM. Nvidia expects its mobile-focused platform will pull in at least $200 million in revenue in 2010, and to represent as much as half the company’s revenue in a few years. In fiscal 2009 the company had overall revenue of $3.45 billion.

But just as Apple shunned Intel for the iPad, most tablet and smartphone manufacturers have chosen to build products containing ARM-based products.

“For Intel, there’s an implication that there’s a lot of the computing world you don’t need an x86 for,” said Auriga analyst Daniel Berenbaum.

Instead of relying on Intel’s trademark power, performance, and multi-tasking technologies, he said, most smartphones and mobile devices marketed in the last year have primarily been designed around simple tasks such as watching movies, listening to music, surfing the Web, or flipping through photos — all without draining too much battery power.

That includes Apple, whose self-designed A4 is rumored to be included in the next iPhone, expected this summer.

“If it’s a reminder that Intel is not ready for this kind of prime time, it is a sign that ARM is upscaling,” said IDC analyst Shane Rau. “It’s a sign that the ARM ecosystem is executing.”

(Reporting by Ian Sherr; Editing by Edwin Chan, Phil Berlowitz)

(Originally published February 3, 2010 on the wire at Reuters News, here.)

By Ian Sherr

SAN FRANCISCO (Reuters) – ANALYSIS – Nvidia Corp’s decision to indefinitely postpone investment in chipsets for Intel Corp’s next-generation processors signals a shift in focus to fast-growing mobile devices that could see the company exiting the PC chipset market.

Led by Taiwan-born Chief Executive Jen-Hsun Huang, executives at the company that spends up to $1 billion annually on research have been talking up its Tegra mobile chip platform — which manages power, memory and graphics for devices such as Microsoft Corp’s Zune media player.

(more…)

By Ian Sherr

CHICAGO (Reuters) – Twenty years ago, the idea that technology would be at the center of business was still part of the future. Computers were just starting to land on desks as fledgling companies like Microsoft Corp and Apple Inc said their products would change the way we work.

Back then, Michael Malone co-authored a book called “The Virtual Corporation,” describing the future as adaptive, driven by technology and global in reach.

Now, in the age of constant communication and social networking, Malone has written “The Future Arrived Yesterday, the Rise of the Protean Corporation and what it Means for You” (Crown Business, $27.50) as a kind of update.

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By Ian Sherr

CHICAGO (Reuters) – ANALYSIS – Major U.S. freight railroads and their advocates have argued for years that government investment is needed in the country’s rail system to take freight off congested highways and keep the economy moving.

But supporters say rail investments have been largely ignored by Congress, suggesting political support is lacking, despite warnings action must be taken sooner rather than later.

“We’re in a growing crisis in terms of investment,” Republican Congressman Tom Petri of Wisconsin, who is a member of the House Transportation and Infrastructure Committee, said in an interview. “Any serious country needs to take a long-term perspective and make reasoned investments in its future.”

But many rail analysts are skeptical government will act.

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By Ian Sherr

CHICAGO (Reuters) – ANALYSIS – When the U.S. housing market was booming earlier this decade, lumber prices were too. When the housing market went into a slump so, too, did lumber.

Now, with nascent signs of a housing recovery, it’s natural to assume lumber prices will follow suit.

But experts say that it may be years before lumber recovers in any substantive way, thanks mostly to conservative production mixed with unpredictable demand.

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By Ian Sherr

“We all have fond memories of playing Monopoly, Scrabble and Connect Four when we were kids.  But when you’re an adult, it’s really hard to find people who can dedicate the time to play.  After his friends and family turned him down for a game of Risk, Ian Sherr went in search of more *worthy* opponents at Board Games night at Games of Berkeley.”

Download the file, here.

(By Ian Sherr. Originally published December 4, 2008 on the air with KALX’s North Gate Radio, here.)

By Ian Sherr

My father can cook. Or so he says.

I grew up hearing stories of how my father wooed my mother by cooking her fabulous dinners and serving them to her over his grand piano in his tiny New York apartment.

The story, as my father tells it, was that his apartment was too small to hold a table and his piano and, being a world-class concert pianist, he chose the piano. So he bought a cover for the piano and fed his dates. I imagine he probably serenaded them, too, but the details have been lost both to time and trailing mumbled memories.

Still, what I’ve been brought up to believe is that my father can cook. And my mother – she grew up in Atlanta in the ’40s. Of course she can cook.

So what shocked my girlfriend, Laura, was that Thanksgiving this year was going to be catered by Marie Callender’s.

I said my parents could cook. I didn’t say they did.

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By Ian Sherr

SAN FRANCISCO — EDITORIAL — Just when I thought I had figured out why the Democratic Party has superdelegates, Nancy Pelosi comes along and says I have got it all backward.

“The superdelegates were established to give many more people at the grassroots level the opportunity to go to the convention and be really the overwhelming majority of who will decide this convention,” the House Speaker told CNN’s Wolf Blitzer last Thursday.

With a straight face.

That was after Super Tuesday, which was supposed to decide the next Democratic nominee. Instead, presidential candidates Hillary Clinton and Barack Obama have battled themselves to a delegate draw that party elders may have to settle.

I don’t know what’s worse – Pelosi pretending that rank-and-file Democrats will get to decide anything this year, or the convoluted system created to ensure they would not. It was adopted in 1976, to reformulate the reforms of 1972, which came in response to the chaos of 1968, when the Democrats tore themselves apart in the streets of Chicago after convention delegates chose Hubert Humphrey, who had never won a primary that year.

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