Amid tablet mania, Intel numbers take pulse of PCs

SAN FRANCISCO (AP) - Intel Corp. is scheduled to report first-quarter results after the market closes on Tuesday.

WHAT TO WATCH FOR: An update on corporate demand for PCs and servers - the engine of Intel's growth in recent quarters. And commentary about the effect of tablet computers, such as Apple Inc.'s iPad, on PC sales.

Intel's numbers help take the pulse of the PC industry, as Intel is the world's biggest maker of processors for PCs.

Businesses are upgrading their computers, but many consumers are being tightfisted - except when it comes to smartphones and tablets, which has the computer industry in a tizzy. The mobile fever that has gripped Intel and others in the computer industry is traced to Apple Inc.'s electrifying success with the iPhone and iPad.

Intel is trying to crack both markets. It's in the unusual role of the underdog. The popular design for smartphone and tablet chips wasn't pioneered by Intel, but by ARM Holdings, a European company.

That has put Intel at an inflection point.

It has tried before to get its chips into phones, but retreated from that market, and is now back. Tablets represent a new opportunity - and a special challenge.

Even though Intel is only now rolling out chips specifically designed for tablets, its results are scrutinized for evidence of tablets' impact, since they show changes in demand that PC makers are anticipating in response to the devices.

Tablets are making a dent in PC sales, and some say they're transforming the nature of mobile computing in ways that "netbooks" - small laptops with limited features - only hoped to. Netbooks had a strong start a few years ago, and helped buoy the PC industry during the worst of the Great Recession, but interest in them has sputtered, in part because of lack of features and poor performance.

Watch for clues about whether Intel executives continue to say that tablets are mostly "additive" to the overall PC market.

WHY IT MATTERS: Intel is changing as the personal computer industry shifts, and its efforts to crack the new mobile markets offer a reasonable proxy for how other computer companies are hustling to shift their businesses.

Intel spends heavily on research to perfects its chip-making techniques. Intel plans to spend more than $7 billion this year on research - a seventh of what analysts expect Intel to pull in in revenue, an unusually high percentage for a company Intel's size.

WHAT'S EXPECTED: Analysts polled by FactSet expect net income of 46 cents per share and revenue of $11.58 billion.

LAST YEAR'S QUARTER: In the year-ago period, Intel earned 43 cents per share on $10.30 billion in revenue.