Upgrades and Downgrades $INTC, CSCO, $HSGI, $SPY $V

Intel Corp (INTC) The Long- And The Short-Term Of It—Reiterate Buy

Quick Stock Call — With the recent spate of good news (quarter results, multigate, dividend increase) driving appreciation, we see potential for ST profit taking in INTC, particularly in light of poor PC data points. But we view the 2H11 setup as favorable when considering the catalyst profile for multi-gate, potential in server and emerging markets, and an inflection in pre-conditions for stock appreciation. When contemplating INTC's appealing dividend yield/valuation, we advise LT investors to use any pullbacks as a buying opportunity and reiterate our Buy rating and $27 target.

Poor PC Environment — April data from NB ODM's was poor, down 16.0% m/m vs. initial expectations of flat to down 5%. To be sure, May is now expected to fare better sequentially and 2Q11 outlooks have not changed dramatically. Meanwhile, Intel has stated it is on track to achieve 20% y/y growth, suggesting they are confident thus far through 2Q11. Nonetheless, we suspect the combination of this poor PC data and stock seasonality (go away in May), could contribute to nearterm profit taking.

Multi-Gate Catalysts Ahead — While the announcement of multi-gate has now passed, we nonetheless see future catalysts associated with the technology ahead. In particular, we expect Intel to clarify the timing of its Atom based multi-gate solution on a low-power SOC process. This will likely include incremental Intelowned blocks for full SOC implementation. We also anticipate announcements of 32nm Medfield customers, paving the way for 22nm customers. Finally, we look forward to the release of an x86-

Visa Inc. (V) Alert: Early Blueprint For Alternative Payments Strategy

Alternative Payments — As suggested on their earnings call, V announced their new global eCommerce & mobile payments blueprint. While the plan is complex, we summarize it in three major themes: 1) developing an open digital wallet (similar to a global Paypal); 2) jumpstarting a mobile prepaid approach for emerging markets; and 3) open up VisaNet to allow third party developers to offer complementary applications. This strategy is expected to create new revenue streams as well as encourage additional transaction volume on credit & debit cards. As part of their announcement, V highlighted partnerships with regional card issuers & merchant acquirers. This builds on their acquisition of CyberSource and Playspan, though mgt suggested no more major acquisitions. V will launch their digital wallet in the U.S. and Canada in fall 2011.



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