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* Bulls eye data centers, dividend, cheap valuation
* Bears worry about economy, tablet cannibalization
By Noel Randewich
SAN FRANCISCO, July 21 Investors nervous about a sputtering economy dumped Intel Corp's (INTC.O) shares even after its quarterly results beat estimates, defying analysts who kept their "buy" ratings or raised their price targets.
The world's top chipmaker on Wednesday scaled back its forecast for the number of PCs likely to be sold this year. [ID:nN1E76I25R]
Some investors believe the company is still too optimistic and worry about high U.S. unemployment, the risk of a European financial crisis and the threat from Apple's (AAPL.O) iPad.
About 30 analysts tracked by Thomson Reuters Starmine have a "buy" or "strong buy" rating on Intel, with 20 rating the company's shares "hold" and just three of them recommending investors sell.
Intel's stock was down 1.4 percent at $22.67 on Thursday afternoon.
"Everyone wants to talk about how Intel took down their PC unit growth forecast. That misses the point. I don't care. Servers are going to drive growth and profitability," said MKM Partners analyst Daniel Berenbaum.
Berenbaum, who raised his price target on the stock to $28 from $25 following Wednesday's report, echoed a view on Wall Street that worries about the Santa Clara, California, company's failure to gain traction in smartphones and tablets are overblown, given signs of strength in corporate spending.
Like many dependent on the PC market, Intel's stock has been punished by investors worried that Apple's iPad is eating into demand for laptops.
Trading at just 10 times expected earnings and with a dividend yield of about 3.7 percent, bullish analysts still spot a bargain.
Nomura downgraded Intel to "reduce" from "neutral" on Thursday, pointing to increased capital-expenditure plans and evidence of a slow, current quarter at other chip and electronics component makers.
Chip gear makers have recently warned that their customers are worried that tough economic conditions will hurt demand for silicon used in cars, tablets and other consumer electronics.
"These data points suggest purchasing managers are cutting orders, which ultimately should come back to Intel," Nomura analyst Romit Shaw warned in a note to clients.
Strong growth in China and other emerging markets, where many families are buying their first PCs and fueling much of Intel's growth, is unlikely to persist at current levels for the longer term, bears warn.
Investors also cite Intel's failure to find a foothold in the fast-expanding market for smartphones and tablets.
Though the size of those mobile-gadget markets remains tiny when compared with the chipmaker's overall revenue, some experts believe smartphones and tablets signal the end of the PC era that Intel's business was built upon.
Companies and consumers will continue to use PCs, but their sales will dwindle, they say. (Editing by Edwin Chan, editing by Matthew Lewis)