Wall Street Beat: Intel disappoints, Salesforce excites at analyst, partner events

Costs are an issue for both companies

With a lull in major tech earnings news this week, Intel's investor day and Salesforce.com's Dreamforce developer and partner conference gave market watchers plenty to mull over.

While Intel appears to be making the right technology moves, flat revenue and investments needed to move into the mobile market are dampening the chip giants' numbers. Intel officials said Thursday that the company will offer new Atom chips for mobile devices in 2014, aiming to increase graphics and overall CPU performance as it tries to edge its way into an area dominated by rival ARM.

The new, 64-bit Atom chips, however, are not likely to appear in smartphones and other mobile devices until 2015. Meanwhile, though company officials expect server chip sales to increase 9 percent next year, they also forecast a significant decline in revenue from chips for client machines. Essentially, the company is expected to be spending a lot of money before reaping expected rewards in the mobile arena in the 2016 timeframe.

Intel also said it is expanding its contract manufacturing program to essentially any company that wants advanced silicon. Up to now Intel has been doing contract manufacturing for only a handful of customers, so the move to expand the program will put it directly in competition with manufacturing giants such as Taiwan Semiconductor Manufacturing Co. and GlobalFoundries.

Even the more positive analysts were not too upbeat.

"Overall, we see some positive indications here -- a more aggressive foundry strategy with a more pragmatic view of who the competitors are, an aggressive investment building a beach head in tablets -- but the most significant elements of the bull case would be PCs stabilizing or Data Center accelerating. We don't see much indication of either," according to a research note from Morgan Stanley.

More pessimistic analysts focused on the presentation of CFO Stacy Smith, who forecast flat revenue for 2014, and earnings per share of US$1.92. Though the EPS expectation is up slightly from earlier estimates, it would still be the third year in a row of annual EPS decline.

"We could actually feel the cheer leach out of the room a bit during Stacy Smiths's final presentation, as outlook for 2014 (mostly flat on revenues, gross margins, operating income, and capex) was likely not quite as good as some had hoped," said Stacy Rasgon, in a research note for Bernstein Research.

On a day where the overall market was up, Intel shares closed Friday at $23.87, down by $1.36.

Salesforce.com did better after its Dreamforce event, with shares closing Friday at $54.69, up $0.25.

At Dreamforce, which ended Thursday in San Francisco, the company launched Salesforce1, a CRM (customer relationship management) development platform built to embrace social media and mobile technology.

Though Salesforce.com has offered Force.com as a deveopment platform for some time, Saleforce1 offers 10 times as many APIs, tools for designing user interfaces and a mobile application that offers access to service and support, CRM modules, third party applications and custom applications built by users themselves.

In a keynote address, CEO Marc Benioff said that he essentially can run the company from his mobile phone using the new software.

"This release is a unification of Force.com and the API suite into a nicely visual and easy to use mobile enabled platform. The User Interface is improved and puts Salesforce far ahead of just about everyone else, and in the same neighborhood as Workday's best-in-class UI," said Canaccord Genuity analyst Richard Davis in a research note. "While we expect Salesforce to innovate, this was a bigger and more positive step forward than we expected."

Some analysts saw a dark side, however, as Salesforce.com costs grow along with revenue.

The company "continues to work higher on apparently impressive billings growth, but the cost of growth is increasing," said Peter Goldmacher at Cowen & Co., in a research note. "It continues to get harder to work thru all the accounting changes and impact of M&A to get a real sense of the health of the business and for that reason alone we are happy to remain on the sidelines. "

Next week, Hewlett-Packard, a bellwether tech stock due to its geographic scope and large portfolio of products, should offer a broader look at how the tech market is shaping up.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags business issuesintelSalesforce.comprocessorssoftwarefinancial resultsArmComponents

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Marc Ferranti

IDG News Service
Show Comments

Cool Tech

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Breitling Superocean Heritage Chronographe 44

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?