Intel's core CPU processor business for laptops and
traditional data center servers is in a downturn. That's made things especially
difficult for Intel, as the company also needs to invest in its ambitious
turnaround and transformation outlined by CEO Pat Gelsinger, who took over in
Intel's earnings are still depressed and its free cash
flow is negative, the stock currently trades at just around 7.4 times its peak
earnings from 2019, and at just 1.4 times book value.
Already years into an expected turnaround in its chip
business, CFO David Zinser disappointed investors when he warned that Intel is
still more than a year away from even breaking even on operating cash flow. He
also admitted that rather than rebounding, revenue from the company's data
center unit (Intel's second-biggest business, according to data from S&P
Global Market Intelligence, but stuck in a decline for the past two years) is
Citigroup analyst Christopher Danely pointed out that
Intel's new guidance is below the consensus of what Wall Street analysts had
forecast for the company -- suggesting it may be heading for an earnings miss.
Danely highlighted that Zinser had said that any profit margin improvements
that Intel accomplishes this quarter will be "modest." And Intel's
efforts to build a chip foundry business (i.e., manufacturing computer chips
designed by other companies, for those companies) seem pointless to
the analyst, who predicts that profits from such a business will not be
"material" for Intel.
Neither Morgan Stanley not Citi has a buy rating on Intel stock, by the way.
(Both rate it neutral.) And for good measure, Citi's Danely is recommending
that Intel abandon the foundry effort.
As well, Intel was fined 376 million euros ($400
million) on Friday in an EU antitrust case stemming from the U.S. chipmaker's
anti-competitive practice nearly two decades ago to block rivals.
Another problem for Intel is RISC-V, which is a reduced instruction set,
with the V (a Roman numeral) signifying the fifth-generation of RISC
A big draw of RISC-V is its open architecture. Fast progress is being made
to expand the ecosystem, which helps with uptake as more software is written on
the instruction set.
This could be a risk to a company like Intel, which is still at this point
highly reliant on x86-based chips.
It's important to bear in mind that computing tech is always in flux. RISC-V
could pose serious challenges for leaders like Intel if rival chip design firms
continue to funnel lots of money into RISC-V hardware and software development.
Why the INTC Weekly
Options Trade was Originally Executed!
It appears that the pendulum has turned for Intel
Corporation (NASDAQ:INTC) after providing us with solid profits earlier this month using an
semiconductor giant fell by 4.5% yesterday, following disquieting remarks made
by the company's CFO, David Zinser, at the Innovation Conference held on
Tuesday. Zinser indicated that Intel is more than a year away from reaching a
break-even point in operating cash flow, a statement that came as a surprise
given the company's ongoing efforts to revitalize its chip business.
The CFO also shed
light on the declining revenue from Intel's data center unit, its
second-largest business as per S&P Global Market Intelligence data. Despite
expectations of recovery, this unit has been underperforming for the past two
It would seem that
this downward spiral will continue.
The INTC Weekly
Options Trade Explained.....
** OPTION TRADE: Buy INTC OCT
06 2023 34.000 PUTS - price at last close was $0.63 - adjust accordingly.
Obviously the results will vary from trader to trader
depending on entry cost and exit price that was undertaken.
Entered the INTC Weekly Options (PUT) Trade on Friday, September
Sold the INTC weekly options contracts on Monday, September 25, 2023 for $0.92; a potential profit of 70%.
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Further Catalysts for the INTC Weekly Options Trade…..
to these disclosures, Investment bank Morgan Stanley stated on Wednesday
morning that they were not entirely unexpected. However, Citigroup (NYSE:C)
analyst Christopher Danely expressed concern in a report released early
Wednesday. According to Danely, Intel's new guidance falls short of Wall Street
analysts' consensus forecast, hinting at a possible earnings shortfall for the
attention to Zinser's mention of only "modest" improvements in profit
margins for Intel this quarter. The analyst voiced doubts about Intel's
attempts to establish a chip foundry business - manufacturing computer chips
designed by other firms - and predicted such an endeavor would not generate
significant profits for Intel.
neither Morgan Stanley nor Citigroup recommends buying Intel stock; both rate
it as neutral. Furthermore, Danely from Citigroup advises Intel to abandon its
chip foundry venture.