PC stocks helped drive those gains after IDC said global PC sales fell 11.4% in the second quarter. That was slightly better than expectations and a 13.9% decline in the first quarter. This doesn't mean PC sales are booming, but it may be a sign that the PC market is starting to stabilize. Shares of Intel (NASDAQ: INTC ) were the biggest beneficiary of the news, jumping 3.1% today on hope that this will give the company more time to execute its plan to get into the mobile-chip business.
How can Intel win other than with earnings numbers? When they weren't in Mobile, that was the problem. Now that they are in mobile, they are saying they will fail because the chips are cheaper. Any direction that Intel goes, the analysts say they will fail because of that strategy.
Intel will have to compete on price, no question about it. Intel chips could be ten times faster and have better battery characteristics, but if they're three times more expensive, nobody's going to buy them. Cheap is in for the great unwashed masses.
Not only that, BUT the mobile market has a fixed size and they will start talking about that. Smartphone units were up last year and continue to increase BUT total phone units were down 3% in 2012. Smartphones are a growing segment of a 'shrinking market".
Also, if you read through Romit Shah downgrade details over history, he said "this quarter was an anomaly and will not happen in the future". Pulling units forward .....
It will probably take some IDC and Gartner training to get the numbers and forecasts right. Intel gave up on that in 2010 (I think that was the year).
The enlargement is that Intel is selling processors for $1000 each and that for each new phone processor they sell for $35 they will lose profit dollars from the $1000 sale. There are Sandy Bridge E processors for $1000 today but most processors Intel sells for PC's are under $300, I even saw a new Sandy Bridge i3 processor selling for $80 the other day . Intel is selling Atom motherboards with processors for around $70, and has been for the past few years. How does this argument hold up? The $4000 server processors will increase as more apps that require server backbones come out. So, when the analysts see that Intel is winning, they will try to argue with success, at first, and then #$%$.