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Can Ultrabooks Defend Intel from Tablets?

Intel's (NASDAQ:INTC) valuation is significantly dependent on its notebook business, which by our estimates accounts for close to 35% of its value. Therefore, the key issue that hovers over the future of Intel centers on the growth outlook of the notebook market. We project that Intel will maintain its dominance in terms of market share, but uncertainty revolves around whether notebook shipments can withstand the surge of tablet popularity. This issue also affects Intel's rival AMD ( AMD ).

We recently reduced our market growth estimates for notebook shipments, in light of evidence indicating tablets cannibalizing notebook sales. This could be a serious issue for Intel because of two factors. One, Intel is a late entrant to the tablet market and there are many other established strong players. Second, revenue per unit opportunities are fewer in the mobile market compared to the traditional PC market.

To counter this, Intel may be betting on Ultrabooks, a line of notebooks that are light, slim and elegant. The company seems to be betting that these could put up better competition to tablets, with expectations that they could account for 40% of overall notebook sales by the end of next year.

But will consumers really be willing to ditch their tablets in favor of Ultrabooks? You can modify the notebook shipment forecast in the chart above to see how this forecast affects Intel's stock value.

Our price estimate for Intel stands at $27.50 , implying a premium to market price.

See our complete analysis for Intel's stock here

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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