Intel Corporation (NASDAQ:INTC) might have met its first-quarter profit expectations, but a cloud of concern continues to fill the air with regards to its PC business that continues to feel the effects of a weaker than expected refresh cycle. Speaking to CNBC, Equity Research Managing Director at Chardan Capital Markets, Jay Srivatsa, affirmed that Intel’s only way out of the ongoing slowdown depends on what enterprise companies will do once Microsoft Corporation (NASDAQ:MSFT) unveils Windows 10.
The sluggishness of the PC business has been ongoing for quite some time as people opt to buy smartphones and tablets at the expense of PC’s. Intel’s 2015 guidance could receive a major setback should enterprise companies opt not to upgrade their current devices after the launch of Windows 10
“[…]Intel is betting that the enterprises will do the refresh and essentially upgrade from the existing systems and as such force more companies to upgrade from the existing previous generations of desktops to newer desktops,” said Mr. Srivatsa
Microsoft Corporation (NASDAQ:MSFT)’s move to end support for XP operating system could be a blessing in disguise for Intel as most of the companies running on the platform will be forced to upgrade to Windows 10 once it is made available. The result could be an increase in demand for new PC models compatible with the OS, which should translate to good business for the company.
Intel Corporation (NASDAQ:INTC) should however not bank on consumers buying PC’s according to the analyst as most of them have already transitioned to tablets for the convenience of portability. Srivatsa believes Intel Corporation (NASDAQ:INTC) should be able to offset some of the weaknesses in the PC business with the ongoing growth in the data centers business as more companies move to host their data on the cloud.
“[..] That business is growing which suggests to us that the server business looks pretty well. You can envision why that it is because a lot of the Amazon.com, Inc. (NASDAQ:AMZN)’s and the Google Inc (NASDAQ:GOOGL)’s of the world are all ramping up their server firms. Netflix, Inc. (NASDAQ:NFLX) is also another example; they are all ramping up their server firm’s to support the video streaming that is happening across the board,” said Mr. Srivatsa.
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