Friday, February 11, 2011

Intel: ‘Medfield’ Can Prevail Without MeeGo, Says UBS

UBS Securities analyst Uche Orji today reiterates a Buy recommendation on Intel (INTC) and a $27 price target following the news this morning that Nokia (NOK) is effectively ditching the “MeeGo” operating system/platform that the two companies were working on together.

The overseer of that software at Nokia, Alberto Torres, is being let go to pursue other interests, and the company referred to MeeGo as being an “open source project,” nothing less, nothing more.

“Whither MeeGo?” asks Orji. He notes that “Intel believes [MeeGo] will continue as an open platform, supported by the Linux Foundation,” noting that the Linux folks of late have been doing more of the support for MeeGo than either Intel or Nokia. Orji notes that MeeGo is already shipping in some set-top boxes and other products, and he opines that large cellular operators — Orange, for example — may still want to put MeeGo on some handsets in order to have more control in the market.

Orji writes that the move by Nokia to Microsoft’s (MSFT) Windows Phone 7 is “a negative” for Intel’s chip ambitions, given that Win Phone 7 is optimized for Qualcomm’s (QCOM) processors. At the same time, the forthcoming “Medfield” chip from Intel was in part intended for MeeGo, but it is not bound to MeeGo as its only hope.

Medfield, which is being developed in a faster 32-nanometer semiconductor process, will also run Google’s (GOOG) Android. Also, Intel’s Wind River embedded operating system group has been tweaking its code to optimize it for Intel’s x86 architecture. That means, he thinks, we’ll see a heightened focus at Intel on “disrupting” the status quo in Android devices.

Orji sees Medfield making only a small financial contribution, but perhaps shifting the stock discussion in a positive direction: “As intel closes the gap on architecture, O/S optimization, and ecosystem development, and it delivers design wins, the debate will shift to which vendor excels in manufacturing, execution, road map, and ease of software reuse.”

Intel shares today closed down 4 cents at $21.76.

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