Shares of Intel are taking a hit Friday after a mixed report out of the world’s top chipmaker. Even though investors aren’t pleased with the numbers, Kim Forrest, a senior equity analyst at Fort Pitt Capital, says she was pleasantly surprised by the company’s results.
Earnings missed by a penny, which Forrest says wasn’t because of higher operating costs, but from taxes. The tech giant has suffered as consumers shift dollars away from PCs and into newer devices like smartphones and tablets. Although Intel has been slow to the handheld device game, Forrest says a good mix of revenue came from its newer chips that are used in tablets. Intel will be able to continue its catch-up effort and the chip maker will even score more design wins in 2014, she says.
As for Microsoft, which will report next Thursday, Forrest says investors will be focusing on sales of the Xbox One. The new product debuted last quarter, and although Forrest believes console owners are shrinking, numbers should still be good because of Microsoft’s market share in the gaming device business. If you were hoping for a CEO search update, Forrest says, don’t hold your breath.
IBM is another tech giant reporting next week and sales in China are key. That nation has been a big area of growth for the company and as regimes transition in the country, Forrest will be looking at whether strength will continue.