When Intel Corporation (NASDAQ:INTC) released its guidance for investors for the year 2014, it intimated to investors that the company was looking at a very flat performance throughout the year. However, what transpired following the release of the guidance was a completely different tale. Where Intel had predicted a very average performance throughout the year, the company actually ended up increasing its total earnings, after deductions, by approx. 25%, compared to the figures of the previous year.
This year, Intel, once again, has released a very pessimistic guide for investors, predicting that performance in the year 2015 won’t be very impressive. But is that true? Or is Intel simply in the habit of keeping investor hopes at the down low as a precautionary measure in case the company fails to deliver? Let’s analyze what the year 2015 holds for Intel, and whether Intel Corp. is being truthful in its claims.
According to some market realists, the current quarter will definitely not be very profitable for the company, as it comes directly after the holiday season. The holiday season is when computers and smartphones are at their cheapest, and demand is at the highest. This results in a very low demand for companies such as Intel and Microsoft in the first quarter of the following year. Industry experts predict this drop in demand by almost 6%.
Another point which strengthens Intel’s case is the fragile nature of its demand. There are many aspects which may lower demand for Intel’s technology this year. One case is the release of Windows 10 by Microsoft. If consumers don’t like the product, they will not opt for Intel’s technology. Another case is against Intel’s data center business, which must perform efficiently in order for the company to maintain healthy sales figures. Demand for the data center services being provided by Intel relies on the growth of its clients including and especially Facebook, Google, and Amazon.
However, all these points are mere speculations, with a very low probability of actually transpiring in the current year. But certain projects being developed by the company are sure to transpire in the current year, ensuring a growth in sales for Intel.
One such project is the release of Cherry Trail microprocessor for tablets, which is the system-on-chip version of the Broadwell processor that the company started to ship out at the beginning of the final quarter of 2014. Cherry Trail is powerful, just like its CPU version Broadwell, hence will definitely contribute to the growth of sales revenue for Intel as tablet manufacturers would opt for the chip to incorporate it into their tablets in order to improve performance.
Another release by Intel this year would be the Sophia chips, which the company has designed for smartphones. These chips are very cost-effective to produce, according to Intel authorized reports, hence will improve the profit margin of the company to a great extent.
It seems where PC sales may fall, Intel has a safety net in terms of chip sales for mobiles and tablets. The company, in any case, will show a lot of improvement this year, contrary to claims made in its guide for investors.
