Analysts slowly showering praise: Ellis expects Intel to have strong demand for Silvermont-based parts:
Intel: B Riley Cheers Krzanich, James; ‘Silvermont’ Should Draw OEMs
By Tiernan Ray
B. Riley & Co.’s Craig Ellis this morning catches up to Intel‘s (INTC) two significant announcements from the last two weeks, the appointment of COO Brian Krzanich as the company’s new CEO, announced last Thursday, and the formal unveiling of a new CPU “core” for Intel’s Atom line of mobile processors, called “Silvermont,” which came about yesterday.
Ellis, who has a Neutral rating on Intel shares, is pleased with Krzanich’s appointment, and relieved the company didn’t go outside its halls:
Our view had been that INTC would promote from within and we thought Krzanich’s extensive mfg background – where INTC’s crown jewels are a closely guarded secret, and early-C12 COO appointment made him the favorite. We have seen him interact well with investors since August, 2011 at events large and small and view him a realist. The James appointment is a bit more surprising, though following a dinner in early-January we walked away quite impressed with her strategic insights and mastery of INTC’s different businesses, first established as chief of staff for Andy Grove and then refined as head of Software & Services (former #2 Doug Fisher now runs). We think she understands that INTC needs to make significant if measured changes to ultimately to win in Mobile while retain a dominant PC and server position. Our sense is both she and Krzanich are foundry proponents.
Ellis expects Intel to have strong demand for Silvermont-based parts:
For years we’ve said INTC tablet APU competitiveness required matching industry-leading clock speed and web page downloads with better active power which has lagged ARM-based rivals. INTC believes Bay Trail offers 3x and 5x better performance and power, respectively with up to eight-core capability, HD4000 graphics, out of order execution, and Windows/Android compatibility. An annual refresh shows commitment to greater mobile success. We expect traditional notebook vendors – with extensive legacy Atom architecture experience with netbooks in C08-12 but an absence of any real tablet success so far, will flock to Bay Trail and follow the reference designs INTC announced in January with Compal, Pegatron, and Wistron. As has been the case since 2010 with non-Apple, Samsung, and China white box tablets, the real question for late-2013 will be finished device sell through.
As far as the stock, Ellis is holding off on recommending the shares because he’s concerned about how further cannibalization of the PC market will play out as “low-end smartphones and white box tablets” continue to capture some demand.