Today: Intel (INTC) suffers on Wall Street as analysts doubt company's ability to create profits; Apple (AAPL) and Zynga also fall, while Google (GOOG) tops $900.

The Lead: During 'a touchy time' for Intel, shares of Santa Clara chipmaker drop

The world's largest chipmaker faces a delicate balance of continuing to push out chips for personal computers while attempting to increase its mobile presence, and analysts doubting Intel helped push the company's stock to the worst performance in the Standard & Poor's 500 and Dow Jones indexes Monday.

Santa Clara-based Intel's shares dropped 3.6 percent to $23.19 Monday, as two analysts joined in a chorus of doubters that see demand for PC chips dropping and a mobile environment that offers very small profit margins. Intel is stuck in the middle, making a big push into mobile despite the smaller profits such a move will generate.


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"It's something they have to navigate carefully," Bernstein Research analyst Stacy Rasgon told The Mercury News. "It's a touchy time."

Intel has been trailing ARM Holdings in the mobile market, which the company ignored for years. Last month, however, Intel's new mobile chips tested at far lower energy usage in an independent competition conducted by ABI Research, surprising outsiders and heralding greater mobile-chip sales.

More sales does not mean greater profits, though: JP Morgan estimates that a tablet chip typically costs about $25 to $30, while Intel receives about $110 for notebook chips, leading the investment bank's analysts to conclude "expected unit shipments are too small to offset declining demand in notebooks."

New Intel CEO Brian Krzanich, who took the reins two months ago, has reorganized business groups and attempted to focus the company on mobile in his short time at the helm, hoping to ramp up mobile sales faster than those analysts expect. Analysts from Citi and Evercore are not impressed, however, with both releasing bearish notes on the company's stock Monday morning.

A sign is shown at the entrance to the headquarters of Intel Corporation in Santa Clara, California February 2, 2010.  REUTERS/Robert Galbraith
A sign is shown at the entrance to the headquarters of Intel Corporation in Santa Clara, California February 2, 2010. REUTERS/Robert Galbraith (© Robert Galbraith / Reuters)

Citi's Glen Yeung maintained his "Hold" rating and $24 price target for the stock, but brought down profit projections and said that the squeeze will likely show up in Intel's second-quarter earnings report, expected to be released next week.

"While dividend yield and optimism around Intel's opportunities in tablets and handsets limit downside, we find it difficult to believe Intel shares will break out to the upside in light of the poor PC environment," Yeung wrote.

Evercore Partners analyst Patrick Wang was harsher, downgrading the stock to "Underweight," equivalent to "Sell," and dropping his price target from $22 to $20 while reporting that Intel's mobile push will not make a great deal of difference in the company's finances even next year.

"We don't expect share gains in tablets and smartphones to be material to 2014 (earnings per share)," Wang wrote.

Other Silicon Valley chipmakers felt the sting of investors' doubts Monday as well, with Sunnyvale-based Advanced Micro Devices dropping 1.7 percent to $4, and Nvidia falling 0.5 percent to $14.16. ARM headed the other way, gaining 1.7 percent to $38.68.

SV150 market report: Apple, HP and Zynga decline; Google pops back above $900

Stock indexes gained Monday ahead of Alcoa's regular kickoff to quarterly earnings season, but Silicon Valley stocks dipped slightly as the two largest tech companies in the region joined Intel in declines.

Apple declined 0.6 percent to $415.05 as yet another analyst reported lower iPhone sales projections for the second half, though the Cupertino tech giant's combined efforts with carmakers could help offset declining sales of its core product. Hewlett-Packard (HPQ) also suffered, dropping 1.6 percent to $25.17; Intel and HP were the only components of the Dow to drop Monday.

Zynga dropped 4.1 percent to $3.29, giving back some of the bump it received after naming Don Mattrick as CEO last week; reports suggested that Mattrick led an attempt to buy the San Francisco social-gaming company while at Microsoft. Palo Alto software company VMware dropped 1.4 percent to $65.58 as former executives continued to pop up on competitors' mastheads, and Adobe (ADBE) declined 0.8 percent to $46.62 as reports suggested the San Jose software firm is looking to bring back the stylus.

On the positive side, Google moved back above $900 with a 1.3 percent advance to $905.09, as the company prepares to build its first campus from scratch; maybe the Mountain View search giant can house its interns in the new buildings to avoid dust-ups with San Jose neighbors. Tesla Motors (TSLA) again established new intraday and closing highs by moving as high as $122.18 before closing with a 1.3 percent increase to $121.61, and CEO Elon Musk's other Silicon Valley company, SolarCity, gained 7.6 percent to $40.99.

Facebook jumped 1.4 percent to $24.71 after beginning to release its "graph search" technology nationwide, and Netflix (NFLX) moved 3.6 percent higher to $233.10 as analysts and executives noted how much the Los Gatos video-on-demand company has changed content-distribution models.

Up: SolarCity, Netflix, Pandora, Oracle (ORCL), Facebook, Google, Tesla, LinkedIn, Intuit

Down: Zynga, Intel, SunPower (SPWRA), AMD, Juniper, HP, VMware, Salesforce, Workday, Electronic Arts (ERTS), Symantec, Adobe, NetApp, Yahoo (YHOO), Apple, Nvidia, Applied Materials

The SV150 index of Silicon Valley's largest tech companies: Down 2.86, or 0.23 percent, to 1,254.51

The tech-heavy Nasdaq composite index: Up 5.45, or 0.16 percent, to 3,484.83

The blue chip Dow Jones industrial average: Up 88.85, or 0.59 percent, to 15,224.69

And the widely watched Standard & Poor's 500 index: Up 8.57, or 0.53 percent, to 1,640.46

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.