Is Intel Purposely Giving Weak Guidance?

Is Intel Purposely Giving Weak Guidance?
By The original uploader was VD64992 at English Wikipedia [Public domain], via Wikimedia Commons

Just like last year, Intel gave a pessimistic guidance to the investors for the current year. There are chances that the company might perform well just like the last time, but for the sake of keeping the investor’s expectations on the lower end it is making such announcements, according to a report from pfhub by Kaitlin Longmire. This can be considered a precautionary measure from Intel in case it is not able to perform as per the expectations it sets.

Could Intel beat expectations again?

Intel was expected to perform average throughout the fiscal year 2014 as informed by it to its investors while releasing its guidance for 2014. However, numbers reported later on were very different than those indicated by the company. The chip maker’s performance improved significantly over last year’s and it ended up with a massive growth of 25% in the total earnings over the last year.

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Intel is working on several projects, which might turn out to be beneficial for the company, and make 2015 a better or atleast similar to 2014 in terms of performance. In the last quarter of 2014, Intel released Cherry Trail microprocessor for tablets, which is expected to improve the sales revenue for the company. The chip maker will also come up with the Sophia chips for the smartphones. According to the company, these chips are cost-efficient and would help in improving the profit margin.

Points in support of Intel’s guidance

On the other hand, there are many factors that support Intel’s low-profile guidance. The demand for Intel’s goods in very fragile in nature, and this strengthens its case of giving not so rosy forecasts, according to the report. The demand for the technology of Intel may be lowered by many other aspects of which Microsoft’s release of Windows 10 is one major. Intel’s technology won’t be opted for the consumers if they do not like the product. For maintaining healthy sales figures, it is very important that the data center business of the company performs efficiently.

Other factors that support the pessimistic guidance from Intel is the current quarter follows the holiday season, and hence might not be very profitable as believed by some of the market realists. The demand for the computers and smartphones is the highest during the holiday season as they are offered at the lowest possible prices. However, in the quarter following the holiday season demand of the products from the companies like Intel and Microsoft witness a significant decline, says the report.

Whether or not Intel is purposefully keeping the expectations low, can’t be said as of now, but the thing will surely get clear when the company will report its earnings.

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