Intel (INTC) on Shaky Grounds with Mobile Processors -- Analysts
Analysts at Wall Street expressed their doubts on the company's capacity to gain more profits. The biggest chip maker in the world is facing their biggest challenge yet: fighting slump in personal computer sales while expanding in the mobile device market.
Analysts doubt whether Intel can handle saving personal computers and moving into another industry. This attempt to boost company performance can backfire, reports say. Intel can get stuck in the middle and the company can lose its focus if it tries to do many things at once.
"It's something they have to navigate carefully," Stacy Rasgon, Bernstein Research analyst, said in an interview to The Mercury News.
"It's a touchy time," she added.
ARM Holdings has been leading the race in the mobile market while Intel trails behind. The company did not focus on this competition not until smartphones came and the industry started booming exponentially. Last month, Intel started their venture into the industry testing mobile chips with lower energy usage. ABI conducted the research which surprised observers as Intel's chips performed better than those from companies earning big in the market.
However, more sales do not give more profits technically. According to JP Morgan, the average chip for mobile devices costs $25 to $30. Intel, on the other hand, sells $110 for every notebook chip they put out. Analysts point out that despite the lower number of sales in notebooks than mobile phones, the expected number of unit shipments will hardly compete or offset sales earned through notebooks. That is, regardless the declining sales of personal computers.
New Intel CEO Brian Krzanich has been restricting the business groups of the company. He intends to refocus on mobile in hopes of boosting mobile sales far better than what analysts predict. Evercore and Citi analysts think otherwise. They released bearish notes about the stocks of Intel last Monday.
While dividend yield and optimism around Intel's opportunities in tablets and handsets limit downside, we find it difficult to believe Intel shares will break out to the upside in light of the poor PC environment," Citi's Glen Yeung wrote.