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Intel's Time May Have Finally Come

It seems we say this every quarter, but this is a particularly important earnings period, since there have been sporadic calls for the beginnings of an economic turnaround toward year end.

Intel
Intel

If that's going to be the case, this is the earnings period, and the guidance, that should begin indicating whether those prognostications still ring true.

So enter Intel , a company that boldly called the bottom of the PC industry last quarter, and sits atop the massive trend of so-called netbooks, which continue to dominate sales trends, and will do so for the foreseeable future. Today's quarterly numbers from the world's largest chipmaker should be dramatically better than last quarter's, even though last quarter's numbers dramatically beat Wall Street estimates. (Remember the worry that the company was on the verge of reporting its first quarterly loss in a generation? Didn't happen.)

The Street is looking for 8 cents a share in profit on $7.28 billion in revenue, a steep decline from the $9.47 billion reported in the same period a year earlier, and essentially flat from the company's last quarter. Still, it's worth considering that Intel has beaten estimates 75 percent of the same, met estimates 17 percent of the time, and missed 8 percent of the time. Zacks.com points out an interesting analyst trend worth noting as well: five analysts have raised second quarter estimates on Intel over the past month. Not enough to move the consensus needle, Zacks says, but an indication that estimates may be too low and that Intel might be poised for an upside surprise after the bell tonight.

Still, even if Intel is flat, and doesn't beat, flat is the new "growth" in this kind of market, especially against a backdrop of IT spending declines and worries that chip sales will only sputter their way forward. The global macro-economic condition continues soft, but there are indications that all-stars in their respective sectors are positioned well to begin taking advantage of a turnaround, when it starts to happen. And Intel is certainly one of those companies.

We're already seeing some signs of strength from Intel. The Atom microprocessor has done wonders for this company, as netbooks continue to surge. We learned just yesterday from DisplaySearch that netbook sales will hit 33 million units in 2009, double what they did a year ago. And while margins might be slimmer in these devices, Intel is positioned better than any other to take advantage of this surge with some analysts believing the volume of sales should offset any margin squeeze. Another important event: The Windows 7 upgrade cycle beginning in a few weeks from Microsoft. Some analysts have written that this will be a flatter, less dramatic cycle than we've seen in the past, but others believe pent up demand to switch over to a new operating system that's been getting good reviews will also address pent up demand to upgrade hardware as well. And that bodes well for Intel, Hewlett-Packard, Dell and many others.

Not to mention Intel's partnership with Apple. Sure, Apple only sells a couple of million Macs a quarter, but this relationship continues to pay dividends for Intel.

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Intel has become quite the bellwether, too. Better than 85 percent of its $35.1 billion in revenue over the last 12 months now comes from overseas customers, more than any other Dow component. Guidance of any kind will be watched closely, though Intel has gotten increasingly reluctant firing up its crystal ball. Any window into the back half of 2009, and certainly even reiterating a PC bottom could go a long way toward pushing these shares higher, which are already up better than 40 percent from their March lows but still a long way from their $24.75 52-week high. And that's leading some analysts to believe these shares have a better shot of rising than falling on even hints of good news after the bell tonight.

Programming note: I will be interviewing Intel CFO Stacy Smith tonight after the bell and will post that interview here.

Questions? Comments? TechCheck@cnbc.com

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