$29 target
Intel seems to be advertising its faith in the PC market despite the rising popularity of smartphones and tablets that threatens to cannibalize the former. The last couple of weeks have demonstrated this faith besides unveiling some minor product developments for Intel.
Intel competes with Advanced Micro Devices and Nvidia in the microprocessor and graphics processor businesses.
Our price estimate for Intel stands at $29, implying a premium of more than 15% to the market price.
See our full analysis for Intel
Renewing Investor's Faith In Core Business
Intel management restated its belief in core PC business despite what several critics may have to say. In a recent Credit Suisse Technology Conference, the company mentioned that it is still confident about the PC business due to high-paced growth in emerging markets. [1]
Furthermore, it re-stated its belief that ultra-books will introduce much needed innovation in PC industry and help combat the cannibalization by tablets. But there is a catch.
It seems that the ultrabooks are a bit expensive, and a consumer might as well buy a low-end laptop and a tablet in same amount of money. Intel is aware of this and is providing $100 subsidy for each ultrabook to its OEM partners in order to kick start the sales. [2] We still have our doubts regarding potential for success of ultrabooks, primarily because of steep pricing. $100 subsidy may not help much.
In another notable announcement, the company stated that its has partnered with Master Card to improve security for online shopping and payment. This is again a hint of developing ecosystem, something what Apple has done for itself. Intel mentions that users of its ultrabooks will be able to enjoy this enhanced security. This is another move to push ultrabooks.
So far it seems that instead of making noticeable announcement in mobile market, Intel is still relying on traditional PC business, perhaps till it has something competitive to offer for tablets and smartphones.
Understand How a Company’s Products Impact its Stock Price at Trefis
Notes:
- Paul Otellini Busts Some Myths About Intel, All Things D, Nov 29 2011 [↩]
- Intel offers $100 subsidy for every Ultrabook made, thinq, Nov 30 2011 [↩]
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