Is Intel the Rodney Dangerfield of high-tech? That was the colorful description given to the company by longtime chip watcher Jon Peddie after sifting through the reactions to Intel's first-quarter earnings report on Tuesday.
"Intel forecast revenue above expectations, as demand for PCs remains resilient in the face of consumers' growing interest for tablets and other mobile gadgets," Peddie, principal analyst at Jon Peddie Research, told PCMag. "However, the press and some 'smart' analysts would have you believe it's Chicken Little time and the sky is falling, the sky is falling."
The analyst said the explosive growth in demand for tablets powered by non-Intel chips, as well as smartphones and other mobile devices being used for computing purposes that were formerly the sole province of PCs, is being misconstrued in some quarters as a death knell for the traditional desktop and laptop markets where Intel's chips are dominant.
"It's not, nor has it ever been, an either or situation," Peddie said, contending that PC market growth and mobile device market growth were not mutually exclusive. "Yes, we may buy a tablet. And yes, some people who don't use a PC much and certainly not for productivity may opt for a tablet in lieu of the cheapo PC they might have bought. But the PC can do so much that a tablet can't, and will never be able to do."
Intel's belated and still uncertain entry into the smartphone and consumer tablet markets is being trumped up by analysts and investors as more meaningful for the company's long-term prospects than it should be, according to Peddie. But the hand-wringing over Intel's prospects continues unabated despite the company's track record of matching or beating Wall Street expectations quarter after quarter.
"Didn't you get the memo? The PC is dead," he quipped. "We're going to design airplanes on our phones, and produce magazines and newspapers on tablets, and do medical diagnoses and research on, um, our other phone, and all of our banking will be done on tablets—okay, a lot of tablets, and the government will run everything on three or four really big phones, and well, that PC thing, you know, it's so 1999."
Sarcasm aside, the analyst pointed out that Intel's server business has been a major beneficiary of the build-out of the Internet's back-end and the data centers that deliver the cloud services consumed by smartphone and tablet users. That ought to be encouraging to investors looking at Intel (and other traditional PC and server chip makers like Advanced Micro Devices and Nvidia), Peddie said, but instead the conventional wisdom appears to be turning Intel into "the Rodney Dangerfield of tech."
"Apple, which sells one-fortieth of what all other PC companies sell, currently has a price-to-earnings ratio of 17.3 to Intel's 11," he said. "I think Intel is greatly undervalued, but so what, the stock market share price doesn't do a damn thing for the company, only the employees with stock options and the shareholders. And I don't know many people who've left a company because the PE was too low."
For more from Damon, follow him on Twitter @dpoeter.
