As Intel and Microsoft report results, manufacturers such as Legend, TPV and Proview are expected to benefit Upbeat earnings prospects for the Wintel duopoly of Microsoft and Intel could benefit Hong Kong-listed computer hardware stocks. The world's largest chipmaker reports results today, while the software behemoth announces earnings on Thursday. Analysts surveyed by Bloomberg expect Intel profits to jump 36 per cent to US$4.24 billion this year. At Microsoft, earnings in the year to June are expected to soar 42 per cent to $11.12 billion. Market watchers and fund managers say the strong results bode well for the global computer industry and Hong Kong-listed players. Over the past two weeks, shares of mainland personal-computer maker Legend Group have climbed 17.3 per cent, closing at HK$3.05 yesterday. Second-tier PC maker Founder Holdings has soared 34.79 per cent to 93 cents over the same period. The rise in computer-related shares comes after a painful three-year rout beginning with the bursting of the technology bubble in early 2000. But while the recent run-up is in part liquidity driven, analysts and traders do not expect the bubble to be re-inflated, pointing to demand from China and corporations beginning to replace ageing computers purchased in the lead-up to Y2K. 'I think the rally has just started,' said Carmela Lau of Guo Tai Jun An Securities. Steven Leung Wai-yuen of UOB-Kay Hian Hong Kong agreed: 'I see the momentum continuing into the third quarter.' One area of expected growth is the replacement market. Computers purchased and installed in 1999 and 2000 are now due for replacement, but because of the economic downturn, many companies cut back spending and delayed purchases. But corporations cannot afford to delay any further. The benefits of putting off upgrades will soon be lost as parts for ageing computers break down and need to be replaced. Also, Microsoft plans to stop supporting the Windows 9x operating system, which will force many companies to upgrade to Windows 2000 or Windows XP. These systems require more muscle to operate and computers purchased prior to Y2K are not ideal. Research firm Gartner Dataquest forecasts global computer shipments will reach 137.6 million units this year, up 7.2 per cent from last year. For next year, it expects worldwide shipments to rise 11.7 per cent to 153.7 million. There is also demand from the mainland market. 'The Sars impact to the PC market [in China] was lower than what we expected,' said Kitty Fok, Asia-Pacific vice-president of International Data Corp's central research group. 'Consumer demand continues to rise and the third quarter is usually the peak season, as people purchase and replace their computers and prepare for the school season to begin in September.' According to research firm iSuppli, notebook computer demand in China is forecast to rise to 2.1 million units in 2006, up from 800,000 last year, for a compounded annual growth rate of 32 per cent. Makers of computer monitors are also expected to benefit from the recovery in PC demand. Brokers surveyed by Thomson First Call put a 'strong buy' recommendation on Proview International Holdings and TPV Technology. Analysts expect rising capital spending from US corporates will boost shipments of cathode-ray tube monitors and their sleeker cousins, liquid crystal displays (LCDs). Kingston Securities said Proview sales would benefit from soaring demand resulting from falling prices for LCD monitors. 'Newly developed LCD-TVs and [plasma display panel]-TVs are likely to be key earnings drivers in the longer term,' the brokerage said. 'Proview is expected ... to report a net profit of HK$129 million in 2003, on strong turnover growth, widening gross margin, lower interest costs and less tax expenses.' TPV Technology, the world's second-largest monitor maker with a 12 per cent share of the global market, saw its LCD monitor shipments rise 15.3 per cent to 727,000 units in the first quarter. 'Despite an ongoing downward pressure on panel prices, TPV's market share and shipment volumes continue to increase,' said Mona Chung of Core Pacific-Yamaichi. 'The company is on track to achieve its annual shipment target of four million LCD monitors.' Analysts also were also upbeat on Legend - which derived about 97 per cent of total revenue from sales in China. In addition to the optimistic outlook for the mainland market, analysts said the company would broaden its distribution channels. 'Legend relies heavily on 'one plus one' stores, which are exclusively selling Legend products,' Goldman Sachs said. 'Going forward ... Legend is likely to increase its number of non-exclusive channels to broaden its exposure in tier-two and three cities and gain market share there.'