Wall Street Analyst: Don’t Buy Intel Stock, ARM Is Winning

Wall Street Analyst: Don’t Buy Intel Stock, ARM Is Winning

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It’s hard living in a post-PC world, especially if you’re chip giant Intel. A Wall Street analyst downgraded the company from “Buy” to “Neutral” after key PC makers signaled plans to adopt rival ARM – not to mention the smartphones and tablets also throwing sand in Intel’s face.

Sterne Agee analyst Vijay Rekesh said Intel faces several storms during 2012-2013. He expects major PC manufacturers will have a 10-15 percent of products using ARM’s processors. As a result, Intel will lose 1 million “high-margin PC units to ARM,” requiring more than 4 million smartphones to offset the loss. Also, more emerging markets will move to the low-cost ARM products, he tells investors.

This isn’t too surprising. Yesterday we reported that Google is jumping from the Intel x86 bandwagon to an ARM-based SoC made by Marvell to produce the next Google TV device. Little wonder Sterne Agee marked down Intel’s target price to $25.40, a drop from $26.

The reason for PC makers are drawn to ARM is obvious. “Low-cost PCs on ARM that can now run Microsoft Office” along with a favorable licensing structure, makes the rival chipmaker a good choice for computer manufacturers, says Rekesh.

The analyst doesn’t see Intel best suited for a post-PC market. Qualcomm “is best positioned to capitalize on smartphone growth,” he told writes in a Friday note.

Then there are the tablets. As Intel loses more PC customers, it must make up the difference by selling its Medfield chip for smartphones, an unlikely prospect. Because Intel can sell a PC chip for around $100 a pop, but Medfield for about $25, it means the chipmaker will have to sell boatloads of smartphone processors to balance the lost PCs, the analyst notes.

It looks to be a long cold winter for Intel and the forecast doesn’t appear to be much more sunny for the near future.

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  • FriarNurgle

    Give me one good reason to trust a Wall Street analyst. 

  • Alex

    Wall street analyst are rarely fair or impartial …   But they are master market manipulation. 

  • David Clark

    Hi, I’m a Wall Street Analyst.
    Don’t buy Apple stock. Did you hear Jobs is dead? 
    Apple is going to drop a bazillion points.
    kthanksbye, I gotta go cash my oversized paycheck. 

  • joewaylo

    I don’t trust analysts either. They’re full of bad reviews and lies.

    But ARM is going to dominate Intel for sure. The low cost energy service ARM brings more than Intel helps and Apple I’m sure will replace Intel i7 chips with ARM processors soon, going with AMD no doubt.

  • ArrowSmith

     I guess nobody cares about having a powerful desktop PC anymore.

  • djrobsd

    Such utter BS.   Intel is making most of their money off servers these days… The processors that power 90% of the internet are still ran by Intel CPUs.  

  • djrobsd

    Wrong.  Macbook pros will never be powered by those things.  People don’t buy $2000 dollar computers to have a tablet-based processor installed in them.  Now if ARM can develop a CPU as powerful as the i5 and the i7 then look out Intel!  But I’m sure Intel is already on the wings of building newer ones that take less power anyway.  

  • Mike Rathjen

    Apple is already working with Intel on next generation chips that use massively less power, so it would be very surprising for them to suddenly switch to ARM. Also, switching to ARM would prevent people from running Windows natively on their Macs.

  • alxlr8

    It is true that Intel has the Server market almost to itself – at the moment. The only thing to point out, though, is that the markets in which Intel plays in Servers have unit shipments in the low to tens of millions. Smartphones number in the hundreds of millions, and the internet of things (a market Intel doesn’t even stand a chance in, because they don’t have a processor that fits the profile) numbers in the tens of billions.

    Do you not think that every one of Intel’s competitors aren’t eyeing how they can cut the legs out from under their stool in Servers? If you were to take away even just 10-20% of Intel’s Server revenues, I suspect that would have a disproportionate impact on their bottom line. Take 50% of that from them, and they start to look very weak indeed. Steal it away completely, and they will lack the money to fund their fab programmes.

    I wonder how long it will be before Intel are forced to enter the foundry market, and bid for their competitors business?

About the author

Ed SutherlandEd Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.

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