- Calling the company's guidance for mid-single digit 2015 revenue growth "optimistic," CLSA's Srini Pajjuri downgraded Intel (NASDAQ:INTC) to Sell today in the wake of its investor day.
- Pajjuri: "Intel’s PC segment volumes are on track to grow 9% in 2014, compared to our PC unit forecast of -2%. We believe share gains explain ~3 points of the discrepancy, which means that the remaining 8 points of difference is largely due to inventory build at customers." He expects Intel's PC CPU revenue to fall 6% in 2015 vs. guidance for a slight decline.
- Bernstein's Stacy Rasgon, who downgraded two weeks ago, also remains concerned about PC CPU inventories. In addition, he thinks Intel's mobile ops "[remain] a horror show."
- Bulls, meanwhile, are taking heart in Intel's forecast for server CPU division (DCG) revenue to grow at a 15% annual clip through 2018. Jefferies' Mark Lipacis: "We think DCG growth alone could add $1 billion to 2015 FCF and $0.15-$0.20 to EPS. We forecast FCF to increase by 30%-40% to $13 billion in 2015."
- Pac Crest's Mike McConnell notes the DCG outlook implies 20%+ Y/Y growth in non-traditional enterprise segments (Web/cloud, HPC, networking) and high-single digit growth elsewhere. "We believe improving U.S. GDP growth, coupled with Microsoft’s planned expiration of [Windows Server 2003 support] in July, is driving Intel’s more constructive outlook for demand from its traditional enterprise customer base next year.”
- The PC division had $4.1B in Q3 op. profit, and DCG $1.9B. Intel's outlook suggests the company isn't too concerned for now about ARM server CPUs; Qualcomm threw its hat into the ARM server ring on Wednesday.