Intel Corporation (NASDAQ:INTC), according to Fortt, released a not so bad guidance for the current quarter which he says observers can understand since seasonally, people should expect the quarter succeeding a holiday quarter to be a bit down at about 6%.
However, he said that The Street was looking for a little bit better guidance from the Silicon Valley veteran. 2014, Fortt said, was a lot better than Intel initially predicted. The company’s outlook was flat for the past year whereas in reality, they increased earning about 25%.
Nonetheless, Intel Corporation (NASDAQ:INTC) is now saying that observers should stick to what the company’s guidance is. Brian Krzanich, Intel CEO, said that the PC market is flat in terms of unit sales. However, he noted that with all the businesses the company is in – this includes data centers, internet of things components and flash memory – they are confident that they will be able to grow this year.
According to Fortt, the Intel Corporation (NASDAQ:INTC) bear case was presented recently in comments made by investor Jim Chanos. He said that the PC market from a revenue perspective is coming down. Furthermore, the other business Intel has have quite a few risk.
Fortt said that the data center business which some estimate to grow 15% year-over-year relies on the growth of other companies such as Facebook, Amazon or Google for their growth. What happens if these companies delay their purchases? Another risk is Windows 10 from Microsoft. If people don’t like the operating system and decide to delay purchases, it will also hit Intel.
However, as for the bull case on Intel, optimists say that the company is that they are selling more units, they have laid the groundwork for mobile and their Sophia chips are coming out this year.
The Sophia chips will cut the company’s production cost and therefore increase their margins. Furthermore, if their data center business does grow, it will mean the company will grow this 2015.
Fortt said that what Intel may be doing is tempering expectations because they are so high given their stellar performance last year.
Kerr Neilson’s Platinum Asset Management owned about 11.56 million Intel Corporation (NASDAQ:INTC) shares by the end of the third quarter of 2014.