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Intel’s Woes Are Far From Over
Posted by: Arrow Analysis (IP Logged)
Date: April 26, 2014 08:28AM
Industry giant Intel (INTC) continues to suffer from the fallback of losing Samsung’s (SSNLF) business to Qualcomm (QCOM) as stocks continue to dip, worrying investors. Earlier this year, Samsung announced that it would discontinue using Intel’s line of Atom processor’s in favor of its biggest rival Qualcomm’s Snapdragon 400. The decision was a big blow to company’s expectations and poses a serious threat to the 40-million chip sale target announced.
Intel released its first quarter earnings on April 15, and the numbers left even the most optimist investors a tad disappointed. Gross revenue was down 8% from the fourth quarter of last year to $12.8 million, while net income was down 26% in comparison to the same quarter.
Although things look bleak for Intel, it, by no means, signifies curtain-fall. The main reason the Mobile and Communications group shows declining revenue is because Intel is subsidizing the cost of its tablet chips. Once Intel sufficiently lowers the cost of its chips, the fall will dwindle, company officials claimed.
Intel’s woes are far from over. Even if it manages to profit largely from the Bay Trail SoCs, it still has tough competition from companies like Allwinner and Rockchip which also sell chips at the $5 level in order to entice companies like Onda and Ramos. Krzanich is also targeting 40-million chip sale and is willing to sell SoCs at less than cost to achieve this goal. Intel’s main competitor, Qualcomm, too poses a serious threat.
Stocks Discussed: INTC, SSNLF, QCOM,