Analysts Chris Caso and Liz Pate from SIG have maintained a Neutral rating on Intel Corporation (NASDAQ:INTC), and expect holiday sell through to play a crucial role in determining the direction for notebook PCs and Intel’s core business.
SIG analysts believe that the most significant determinant of Intel Corporation (NASDAQ:INTC)’s stock price is the core (Haswell) business, and the chip maker is aiming to keep its core stable and enhance its way through incremental adjacent markets along with soon to come holiday season.
User feedback won’t be available until Thanksgiving
The report said that Intel Corporation (NASDAQ:INTC) gave no update on its near term guidance but said that the new line-up of products will be available for retail in the starting of the fourth quarter, with Intel Corporation (NASDAQ:INTC) beginning their shipments to OEMs in the third quarter. The analysts believe that PC supply chain will have a clearer vision of the fourth quarter in late August, but as the products and designs are relatively new so there cannot be any insight gained from consumers until after Thanksgiving.
Investors worried on cannibalization
Investors are raising concerns over probable cannibalization of core Haswell volume by the emergence of Bay Trail processors. On the basis of meetings held with the investors, analysts hold that cannibalization has become a chief reason of worry. Intel Corporation (NASDAQ:INTC) on the contrary holds that investors are underestimating its ability to segment the market. The chip making company is planning to segment the market from other avenues in order to encourage tablet consumers to go for Bay Trail, and using Haswell for the core notebook customers.
Foundry business to gain under Intel’s new CEO
The new CEO of Intel Corporation (NASDAQ:INTC) has a manufacturing background, which will help him in understanding the capacity of Intel’s increasing foundry business. Analysts think that foundry strategy is important in the development phase, and the new CEO will take an all together different perspective on earning profit from Intel’s production technology.
According to the analysts, gross margin coming from Bay Trail are less than Intel’s corporate average but are above the core based Celeron and Pentium processors. If Baytrail comes in place of Core based Celeron/Pentium it will enhance the gross margin.
Intel Corporation (NASDAQ:INTC) is focused on its plan to foray into the tablet and smartphone markets, which at this point of time has become an unavoidable segment for Intel. Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) Galaxy Tab 3 is their highest profile tablet design that is powered by Intel’s processor and LTE baseband. According to the analysts, continuing the initial success at Samsung with Bay Trail will be crucial for Intel.
