Intel outlook clouded by weak demand, analyst says

Intel outlook clouded by weak demand, analyst says

SAN JOSE, Calif. – Despite Intel’s reports of progress in tablets and smartphones at the Consumer Electronics Show this week, at least one analyst remains bearish on the x86 giant’s outlook.

Atmel, on the other hand, is expected to reap gains from increasing use of touchscreens in mainstream laptops.

Intel announced at CES new smartphone wins for its Atom-based Medfield platform including a sub-$200 smartphone from China’s ZTE. It also said it will ship a 7W Ivy Bridge processor for low power Ultrabooks and drive the prices down to $599 by the end of 2013. In addition, Intel talked about a 1.2-GHz Atom Z2420 for mobile systems selling for less than $20.

But "positives at CES are offset by continuing weak PC demand and escalating tablet cannibalization concerns," wrote Bobby Burleson, a financial analyst with Canaccord Genuity in a report issued Wednesday (Jan. 9).

“We also believe Intel's bulkier Core-based tablets on display will have a tough time finding a niche, given new Ultrabooks are universally touch-enabled (many with convertible feature) and these expensive Core tablets have a shorter battery life and are costly,” he added.

The Wall Street analyst maintains a hold on Intel stock. He did not change his estimates that Intel will report revenue for the last quarter of 2012 of $13.6 billion, estimating Intel’s revenues in 2012 and 2013 will be $53.464 billion and $54.86 billion, respectively.

“As Intel derives approximately 90 percent of its revenues from the PC market, any material slowdown in PC unit growth could impact the company's revenues and profitability,” Burleson predicted. “In addition, declining production volumes at Intel's internal factories could negatively impact gross margins, as could adverse pricing conditions driven by aggressive competitors in the processor and chip set space,” he added.


Intel will rely on continuing demand for Ultrabooks.

TAG:Ivy Bridge Touch Screens Intel Atmel CES Tablets Smartphones Core Ultrabooks