Analysts at Jefferies are suggesting buying Intel Corporation (NASDAQ:INTC) shares “while sentiment is still negative.” Analysts (Mark Lipacis, Sundeep Bajikar and Delos Elder) note that they have upgraded their take on Intel in an earlier report based on the $60 billion investment in capital expenditure, and research and development driving innovations, driving Intel’s semiconductor manufacturing lead.
Intel transformation compelling
Citing their previous report, the analysts pointed out that Intel Corporation (NASDAQ:INTC), is focusing on its manufacturing dominance in manufacturing low-power/ low cost MPU. These MPUs are made to power tablets and hybrid tablets ‘notebooks priced under a $500 price tag. Analysts find this transformation from Intel to be ‘compelling’ as now it focusing more on the under-serviced sub-$500 market, which has become the epicenter of all growth taking place in the industry. Intel neglected this market for a long time.
Jefferies analysts suggested that Bay Trail MPU (22nm) will bridge the gap ito the under-$100 tablet and low priced 2-in-1 notebook segment, which will fuel growth for Intel again after three years of flat-to-down growth. Also, Intel Corporation (NASDAQ:INTC) is expected to manufacture low power version of Intel’s fourth generation PC-MPU Haswell Y, which is supposed to provide around 10 hour of battery life to notebooks. In the first quarter of 2014, analysts expected Intel Corporation (NASDAQ:INTC) to enhance its fifth generation performance PC/notebook MPU (Broadwell on 14nm), and its next-gen handset processor Merrifield (22nm) for LTE smartphones.
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PC shipments may see uptrend
Referring to their October 20th report, the analysts suggest that in the third quarter of 2013, enterprise PC shipment will probably inflate for the first time in 6 to 8 quarters along with Corporate PC / Server Spending Cycle.
According to the analysts, Microsoft Corporation (NASDAQ:MSFT) echoed similar views. The report mentions that the corporate PC/Server spending cycle is not the core consideration in their thesis but is a positive.
For the second straight quarter, Microsoft witnessed a growth in its business segment, which was in line with analysts’ expectations. In its earnings call, Microsoft Corporation (NASDAQ:MSFT)’s CFO, while sharing his thoughts on the PC market, said that the segment has seen some improvement, more than expected. Also, management is witnessing stabilization in the business segment with growth in two straight quarters, and expect a balanced growth outlook for quarters ahead. For the quarter, Microsoft Corporation (NASDAQ:MSFT) posted a profit of $5.2 billion or 62 cents per share, which is an increase of 17% over $4.5 billion, or 53 cents for the corresponding quarter of the last fiscal period.