IBM and Intel shares tumbled Friday, a day after reporting fourth-quarter earnings. Four experts weighed in.
Tim Seymour, founder and CIO of Seymour Asset Management, highlighted Intel’s higher-than-expected revenue and maintained a positive outlook regarding its nanometer updates.
“It was a record year on revenue for Intel. I know it wasn’t a year where they necessarily gained ground. They lost ground to AMD, to Nvidia, I know that. But when you consider their positioning, data center was better and when you consider at least they gave some updates on 10 nanometer, four times the supplies, 7 nanometer progress. And look, the relationship with Taiwan Semi isn’t necessarily adversarial. It’s maybe synergistic, so a big salute to Dan Loeb at Third Point, because they’re up 40% or so since at least this was announced, and maybe even a bit more than that, and that shows where both activism and obviously positioning is very important.”
Dan Nathan, principal of RiskReversal Advisors, is ditching IBM, noting that it is losing ground in cloud technology.
“You just throw all the worst trends in technology and you mash them up together and you have IBM. They made that acquisition of Red Hat. And they have a CEO that people feel confident about, [but] I think [investors would] probably feel a lot more confident if he was running another company that actually was growing. I mean look at those cloud numbers, they’re just not even that good, they’re up 10% or something like that. To me, I just think this is kind of dead money, it’s not for me.”
Dan Ives, senior equity research analyst at Wedbush Securities, said IBM’s growth in cloud computing has been lackluster.
“It’s another black eye for IBM, especially on cloud. I mean, if you think about what’s going on right now, it’s a cloud arms race. Look at Microsoft, AWS, and IBM has continued for one step forward, two steps back, and even though there’s a new CEO, new strategy, this is just a continued share-loss situation. I think it’s troubling for the Street, especially in terms of what you’re seeing with a trillion-dollar cloud market under their nose. It’s an Everest-like uphill battle right now in cloud for IBM, and I think you saw that last night.”
Jim Cramer, host of CNBC’s “Mad Money,” focused on Intel’s potential long-term challenges and potential.
“PCs are amazing, Dell’s great, HP is doing a terrific job. Obviously Apple, the Macs are very, very strong. I think that you want to base a theory about PCs, that’s fine, but you really need data center. More importantly, Intel is a technological leader, so there’s a lot of businesses that they compete against, AMD and Nvidia. And in both cases, AMD and Nvidia have won, so now [incoming CEO] Pat Gelsinger has to be thinking about 2023. Their people wanted to think about 2022, but it’s 2023. And if they come back, if they’re buying it now for 2023, that is very, very difficult, because that means you’ve got real value you’ve got to see through.”
