Intel Faces Lowered Expectations

Intel reports first-quarter earnings Tuesday night, and analysts aren’t expecting much this time around.

Intel made headlines last year with once of its strongest second halves ever, but the stock – and expectations – have slumped since the start of the year, culminating in a revenue warning last month.

One firm – ThinkEquity – thinks that’s a positive, arguing that lower expectations are largely priced into the stock at this point.

Intel’s first-quarter earnings are expected to be 27 cents a share, nearly double its earnings from a year ago – but down 18% from the fourth quarter, and second-quarter earnings are expected to be flat with the first quarter.

ThinkEquity said in a research note Monday that Intel isn’t likely to report blow-out numbers or guidance, but the firm said investors should look past the next two quarters and focus on expanding margins and leverage as 300mm production ramps up. At 18 times 2005 estimates, Intel looks attractive, the firm said.

The broader market rose on optimism ahead of this week’s earnings and economic reports.

The Nasdaq rose 12 to 2065, the S&P 500 climbed 5 to 1145, and the Dow rose 73 to 10,515. Volume declined to 1.1 billion shares on the NYSE, and 1.51 billion on the Nasdaq. Advancers led by a few issues on the NYSE, and 18-13 on the Nasdaq. Upside volume was 56% on the NYSE, and 70% on the Nasdaq. New highs-new lows were 160-51 on the NYSE, and 181-14 on the Nasdaq.

After the close, Novellus beat estimates, and Novatel raised guidance.

During the day, Red Envelope soared 20% after raising guidance.

3Com gained 6% on a positive write-up in Barron’s.

Comcast rose 4% on an upgrade from Bank of America, which speculated that Comcast will drop its bid for Disney .

Microsoft edged higher after settling another lawsuit, and AMD and Intergraph also settled their differences.

IPIX , the former Internet Pictures, continued to find new life as a video surveillance company, soaring 43%.

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