Intel Corporation (NASDAQ:INTC) CEO reported the company’s fourth quarter earnings report on Thursday Intel Corporation (NASDAQ:INTC) managed to beat the streets estimates for fourth quarter in every aspect. But, in spite of a good quarter earnings, Intel Corporation (NASDAQ:INTC) shares dropped in the after-hours mainly due to the guidance reported for first quarter of 2015. The guidance was well below the street estimates, which made many investors unhappy. Ascendiant Capital Markets Managing Director, Cody Acree talked on CNBC about his opinion on Intel Corporation (NASDAQ:INTC)’s quarterly report and guidance.
Acree pointed out that the dip in Intel Corporation (NASDAQ:INTC) stock in after-hours was mainly due to the fact that the company’s guidance was pretty light. He said that the revenue was light and gross margin was definitely light in the guidance. He pointed out that Intel Corporation (NASDAQ:INTC)’s mobile business was pretty weak and they need to improve in that business to close the gap there.
Some predictions say that it will be not until 2016, Intel Corporation (NASDAQ:INTC) will wipe out the loss and start to make profits in mobile business. Acree mentioned that mobile business did not make revenue in addition it had incurred a loss of around $6 billion to Intel Corporation (NASDAQ:INTC). He added that company had to pay money to sell processors for mobiles and tablets. He said that first thing Intel Corporation (NASDAQ:INTC) need to maintain the market share that they are buying in the mobile business. He feels that competing against the likes of QualComm is very difficult for Intel Corporation (NASDAQ:INTC).
“[…] Something where you got to compete against company the size of Qualcomm, to fill up expensive factories with a competitor like Qualcomm is a really difficult challenge. […] you follow the gross margins, you go from a monopolistic position, where you haven’t had a competitor like AMD, PC’s have been good, you have been able to really set prices. Now you have got into fighting in tablets and smartphones, fighting against Qualcomm and others [..] in China and Taiwan,” Acree said.
He added that under extreme pricing pressure from competitors like Qualcomm and with initial cost of around $5 to $6 billion for factories, it is impossible for Intel Corporation (NASDAQ:INTC) to have higher gross margins. Ascendian Capital Markets maintain a ‘sell’ rating on Intel Corporation (NASDAQ:INTC) stock since they begin the coverage in March 2014. They currently have ‘sell’ rating with price target of $24 for Intel Corporation (NASDAQ:INTC) stock.
Ascendian Capital Markets has missed a 49% rise up in Intel Corporation (NASDAQ:INTC) stock since March. Acree feels that it was due to the strong PC market, which Acree thought would have a secular decline. He mentioned that now they are maintaining the rating due to the below par mobile business of Intel Corporation (NASDAQ:INTC). He said that he would short the Intel Corporation (NASDAQ:INTC) stock.
Disclosure: None
Let Warren Buffett, David Einhorn, George Soros, and David Tepper WORK FOR YOU. If you want to beat the low cost index funds by an average of 6 percentage points per year look no further than Warren Buffett’s stock picks. That’s the margin Buffett’s stock picks outperformed the market since 2008. In this free report, Insider Monkey’s market beating research team identified 7 stocks Warren Buffett and 12 other billionaires are crazy about. CLICK HERE NOW for all the details.
