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For those looking for signs of an end to the recession, eyes may very well
be on Intel’s (NASDAQ:INTC) quarterly
earnings results on Tuesday as a bellwether for the performance of technology
companies across the board.

That’s because Intel makes the components that are the building blocks of
computers that corporations and consumers buy. So an increase in business
for Intel is likely to mean that PC and server makers are ratcheting up
production in anticipation of the return of PC demand and that software vendors
will also get higher OEM sales as those new computer systems actually get sold.

And that’s the scenario FBR Capital Markets
indicates is likely to be in store when Intel announces its results on Tuesday.
The research firm’s checks into the supply chain for the top five notebook ODMs
and the top four desktop motherboard makers have “somewhat meaningfully
improved” versus checks from a month ago.

“For Intel, we think the firm will deliver reasonably robust Q2 revenue and
gross margin results and could guide Q3 revenues to grow 4 percent to 12
percent sequentially to a range of $7.6 billion to $8.2 billion, ahead of the
Street estimate of $7.8 billion,” the firm says in a brief research note issued
July 13.

FBR’s supply chain contacts reported much
stronger than expected builds in June, the firm says. For example, notebook
builds in Q2 are now forecast to grow by 14 percent quarter over quarter
compared with previous estimates for the quarter of 10 percent and 11 percent.

For motherboards, FBR is now forecasting Q2
builds to be flat quarter over quarter. That compares with the previous
forecasts for Q2 of a 12 percent decline and a 10 percent decline.

Overall, PC builds for Q2 are now forecast at 7 percent growth quarter over
quarter versus previous forecasts of flat to up 1 percent for the quarter,
according to FBR.

For Q3 the forecast is even brighter, with notebook builds expected to grow by
15 percent quarter over quarter and desktop builds to grow by 11 percent
quarter over quarter, yielding an overall 13 percent growth in PC builds.