Intel Corp.'s (INTC) ship is sinking. Analysts from Bernstein and Benchmark have re-evaluated their views on Intel after Brian Krzanich, CEO, stepped down last week. Krzanich was forced to resign after news broke that he had a "consensual relationship" with an employee. Intel has a non-fraternization policy. Bernstein downgraded Intel to underperform. The chip manufacturer's price target was lowered to $42 from $54. Bernstein analyst Stacy Rasgon wrote, "frankly, we have been regretting [Intel's upgrade to market-perform]; not necessarily from the perspective of the stock, but rather that it is becoming increasingly that the structural issues we have promulgated for years are becoming ever obvious to investors. And now, we believe uncertainty around the CEO change provides an opening, limiting risk if numbers continue to move up for the time being, while these structural issues grow more visible." Bernstein noted that "Intel [is] about to enter a product cycle without leadership for the first time." Benchmark analysts are initiating a hold for Intel. "It is difficult to find other mega-cap stocks with such a compelling story, in our view. However, Intel recently pre-announced upside to near-term results, announced the resignation of its CEO and faces several competitive threats, all of which may take the stock back to its historical multiples and keep investors on the sidelines. Hence our hold," wrote Benchmark. It's not all bad news, though. Bernstein analyst Mike Burton wrote, "Data center architectures and spend are shifting toward memory and accelerators; we believe Intel has a play here with its investments in NAND/XPoint and the Atera acquisition. However, it faces stronger competition from Nvidia and others in these areas." On Monday, June 25, Intel was downgraded by Nomura Instinet. Romit Shah downgraded Intel to neutral from buy. He also lowered the price target to $55 from $60. Shah cited the lack of leadership at Intel as a reason for the downgrade. In morning trading, Intel was down more than 1% to $50.01. In the past five days, Intel has dropped nearly 7%. Read More Intel Faces Multiple Downgrades After CEO Departure : https://ift.tt/2yLOi6F
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Netflix’s Jonathan Friedland. Intel’s Brian Krzanich. Ford’s Raj Nair. Companies act swiftly nowadays. Businesses are finding they must deal quickly and decisively with inappropriate behavior in the workplace in a way they never had to before. What once took months or years to address has been accelerated by the increasing influence of online consumer advocacy groups, the role of social media in people’s lives and the #MeToo movement. On Friday, Netflix Inc. NFLX, +5.10% announced it had let go of chief communications officer Jonathan Friedland due to his use of a racial slur on at least two occasions. Intel Corp.’s INTC, -2.27% chief executive Brian Krzanich resigned Thursday after the company found he had violated the company’ non-fraternization policy by having a past consensual relationship with another company employee. Nair, a Ford Motor Company F, +0.39% veteran who ran the company’s North American business, left after an investigation found his behavior was inconsistent with the company’s code of conduct, though Ford did not provide details on the nature of his behavior. Read: Intel must do something it has never done after inglorious exit for CEO “Companies are looking at a new set of best practices,” said Davia Temin, chief executive of Temin & Co., a New York-based reputation and crisis-management firm. “The old set would have been to close your eyes, ignore it and hope it goes away or that no one notices,” she said. These new standards are causing some big changes at the top. See also: Time magazine names ‘The Silence Breakers’ 2017 person of the year The percentage of CEOs forced out of office for ethical problems is on the rise. In a study published last year, PricewaterhouseCoopers found CEO dismissals for ethical lapses increased by 36% between the five-year period ending in 2011 and the same span ending in 2016. And with the recent #MeToo movement gaining traction, the number is likely tracking even higher. Ethical lapses haven’t necessarily increased, but firings have, said DeAnne Aguirre, a principal with PwC in the U.S. and co-author of the report. She expects the number of such firings to continue to rise. At least 416 executives and celebrities have been accused of sexual misconduct since December 2016, according to a data collected by Temin’s firm. The majority of Temin’s list consists of corporate executives, though it does include celebrities like Bill Cosby and Kevin Spacey. Over the past 18 months, 195 have resigned or have been fired and 118 have been suspended, placed on leave or are facing legal repercussions without permanent removal. Read now: Kevin Spacey scandal cost Netflix $39 million Related: Pixar head John Lasseter to leave Disney in wake of #MeToo Social media has made companies “ultra-porous,” said Temin. Nowadays, little can be kept private, and word of misconduct spreads quickly among online networks. There is also added pressure from consumer activism groups like Grab Your Wallet and Sleeping Giants, which publish CEOs’ names and email addresses for followers to contact. “The degree of accountability for one’s behavior around cultural sensitivity and around gender issues and other issues has heightened enormously,” Temin said. CEOs and other C-suite executives are often the public faces of the company, which forces companies to move quickly when they behave inappropriately, said Brayden King, a management professor at Northwestern University’s Kellogg School. “The public and the employees of the company take what these executives say as a reflection of the company’s culture and values,” he said. And everything is fair game, even what they say in private. Once social media catches wind of an executive displaying inappropriate behavior, people automatically associate it with the company and word can spread like wildfire. “There’s very little space now between what is personal and what is public for these executives,” said King. Netflix shares have gained 107.3% so far this year. Intel shares are up 8.7% and Ford shares have slid 7.2%. The S&P 500 SPX, +0.47% has gained 1.8%. Read More Netflix, Intel ousters show companies are moving fast to tackle exec misconduct : https://ift.tt/2N1vovQ
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Tiernan Ray
Here are some things going on today in the world of tech: It's a big day for chip ratings, with Intel (INTC) getting a downgrade and an initiation note, and new coverage of Nvidia (NVDA). Intel’s Structural Cracks Stacy Rasgon with Bernstein cut his rating on Intel to Underperform from Market Perform, and lowered his price target to $42 from $54, asking the question, “Does the hole at the top go all the way through?” referring to last week’s abrupt departure of Chief Executive Brian Krzanich for violating a no-fraternization policy. Rasgon confesses to regretting upgrading the stock to Market Perform after the last earnings call, writing, “We typically don't like to jerk our ratings around, but we admittedly did tactically upgrade the stock following their last earnings on a belief that strong datacenter growth would likely continue for now.” That may still be true, he believes, but a search for a replacement for Krzanich, which he imagines could take six months or longer, is likely more and more to expose “structural” problems at Intel: “It is becoming increasingly apparent that investors are starting to open their eyes to the structural issues we have been promulgating for years, especially with the official disclosure of 10nm process issues that virtually guarantee the company's vaunted ‘process leadership’ (in theory the fundament of the bull case) has all but vanished.” Rasgon thinks that as the structural issues grind on, “increasing attention on the 10nm issues and potential consequences, coupled with a likely much more challenging datacenter environment next year, increasing competition, other structural issues, and now leadership uncertainty is likely to at least put a ceiling on the stock for now (and limit upside risk) with downside possible as structural issues move from the theoretical to the potentially real.” Intel shares today are down 51 cents, or 1%, to $50.20. Another Negative Vote for Intel Meanwhile, Mike Burton with The Benchmark Company starts coverage of Intel along with Advanced Micro Devices (AMD) and Nvidia, giving both Intel and AMD a Hold rating and starting Nvidia at Buy. For Intel, Burton has a raft of concerns, including the server business, where “growth is currently in a sweet spot with a robust spending environment” seeing a slowdown in the second half of this year as it faces “less favorable comps.” He points out Krzanich has “reportedly admitted that it expects to lose share to AMD in 2H18, making the question 'how much,’ rather than 'if’.” “Also, we believe ARM-based processors from companies like Cavium could chip away at INTC's dominant market share in servers.” Then there's the rising competition from “accelerator” chips, in particular Nvidia’s GPUs. Similar to Rasgon, Burton thinks the stumbles Intel has had with its chip-production issues are a long-term worry: “INTC has twice slipped on the roll out of its 10nm solutions, and investors are increasingly concerned about Taiwan Semiconductor Manufacturing pushing through to 7nm (its equivalent node). “Near term, we see little evidence that this may cause serious harm to the Client, Data Center, or Programmable business segment results, but it is concerning because the INTC model is built around its core competency as the semiconductor manufacturing process leader.” Holding Off on AMD As for AMD, Burton thinks the company has “great opportunities ahead,” especially if Krzanich is right and the company is going to steal server-market share with its “Epyc” chips. But he thinks much of that is already baked into the share price: “While Ryzen and EPYC tailwinds should more than offset potential crypto headwinds, we are concerned that Street estimates already reflect much of this growth, and that valuation appears inflated beyond the levels that we are comfortable with.” Regarding that valuation, he notes the stock fetches “a non-GAAP forward EV/EBIT of 21.8x and a P/E of 30.1x Street estimates vs. its semiconductor peers, which trade at a non-GAAP median forward EV/EBIT of 14.3x and a P/E of 16.1x.” The company’s “above average growth opportunities” and the leadership of CEO Lisa Su “deserve a premium,” he concedes, and I expect he may “get more positive” if there's a market correction. AMD shares today are up 29 cents, or almost 2%, to $15.40. Praise for Nvidia As for Nvidia, whose stock is also pricey, Burton is willing to go with it, assigning a $280 price target, as the company is “in the middle of many of the hottest computing trends.” “While a lofty valuation gives us some pause, we expect the Company to deliver upside to estimates with demand driven by sustainable growth in its core markets in the data center and the upcoming Volta product cycle for consumer GPUs (which we expect in 2H18).” Again, the valuation is above the median for the group, at a forward multiple of almost 30 times projected GAAP EBIT, writes Burton. But he sees a decent valuation when looking out further in time: “Our $280 price target for NVDA is based on a GAAP EV/EBIT of 22.6x our FY21(CY20) estimates in line with the current 22.6x multiple on our FY20 (CY19) estimates. “On a P/E basis, our $280 price target represents a 28.4x GAAP P/E on our FY21 (CY20 equivalent) EPS estimate of $9.87. “We note that this is a discount to NVDA’s 6-month, 1-year, 2-year, and 3-year median P/E multiples of 37.6x, 43.5x, 38.2x, and 35.2x respectively.” Also upbeat about Nvidia today is Shebly Seyrafi of FBN Securities, who starts the stock at Outperform, with a $300 price target. Nvidia is no longer a “GPU” company, it's a “platform company,” he writes. “NVDA's story as a best of breed gaming company, a major play on AI/CSP/HPC, and a great play on autonomous, stands on its own,” writes Burton. The company is “one of the few plays on artificial intelligence and machine learning, key trends which are beginning to take off,” he observes, and he thinks sales of the chips for machine learning will rise by another 57% this year after 133% last year, and who'll come to make up 28% of revenue in fiscal 2021, up from only 12% a year ago. “This mix shift has positive implications for the company's gross-margin percentage, as well,” he muses, “as we estimate that datacenter GM%s are ~75%+, much higher than the corporate GM% of 60.2% in F2018 (and 64.7% in FQ1 2019).” “We project that the mix shift to datacenter...should help increase NVDA's corporate GM% from 60% in F2018 to 64% in F2021.” Nvidia stock today is up $4.54, or 2%, at $243.66. Sign up to Review & Preview, a new daily email from Barron’s. Every evening we’ll review the news that moved markets during the day and look ahead to what it means for your portfolio in the morning. Intel Corp. stock continued to struggle Tuesday morning in the wake of an abrupt CEO departure, after a Bernstein Research analyst downgraded the stock and said Brian Krzanich’s exit was emblematic of larger problems at the chip maker. Intel INTC, -2.17% stock fell more than 1% in early trading Tuesday, and have declined 5.1% through Monday’s close since Krzanich resigned Thursday morning. Bernstein analyst Stacy Rasgon downgraded the stock to underperform Tuesday, less than two months after abandoning his previous bearish position in the wake of Intel’s April earnings report. “Frankly, we have been regretting that upgrade; not necessarily from the perspective of the stock, but rather that it is becoming increasingly apparent that the structural issues we have promulgated for years are becoming ever obvious to investors,” Rasgon wrote. “And now, we believe uncertainty around the CEO change provides an opening, limiting upside risk if numbers continue to move up for the time being, while these structural issues grow more visible.” Don’t miss: Intel must do something it has never done after inglorious exit for CEO While Rasgon admits that Intel’s financial performance is stellar at the moment, he sees danger in management of operating expenses, capital expenditures, working capital and growth coming from “less-attractive markets.” He said he understands those who short Intel stock, as the CEO change could depress potential for gains in the near-term until earnings are pressured next year amid increased competition from the likes of Nvidia Corp. NVDA, +0.58% and Advanced Micro Devices Inc. AMD, +1.17% “Overall we believe the structural elements of the short case are becoming more apparent, and the abrupt CEO change can cushion upside risk if numbers drift up in the near term (with the potential for a sharp break if and when issues begin impacting numbers),” Rasgon wrote. In an emailed statement, an Intel spokeswoman pointed to Intel’s opportunity in servers and leadership in the CPU arena to combat Bernstein’s doubts. “While we are prepared for a more competitive environment as we move through 2018, we’ve already factored that into our financial forecast and we’re in a great position to compete,” Intel said. “We remain very confident in our products, our roadmap and our competitive position.” Rasgon brought down his price target to $42 from $54 despite the increased forecast Intel included with the news of Krzanich’s departure. He said that he believes Intel numbers will be strong through the second half due to strong sales of server chips. Most analysts increased their target prices in the wake of Krzanich’s departure and the updated forecast that was released Thursday, though Rasgon is the third analyst tracked by FactSet to downgrade the stock since the change. At least 18 analysts have increased their targets since Krzanich resigned, while at least five have moved them the other way. Opinion: Intel has a golden opportunity as CEO Brian Krzanich leaves company Overall, Rasgon is one of only four analysts who consider Intel the equivalent of a sell, with 25 of 39 analysts tracked by FactSet rating the stock the equivalent of a buy and 10 calling it a hold. The average price target Tuesday morning was $50.18, about 19% higher than the going rates. Intel stock is up 8.6% so far this year, while the Dow Jones Industrial Average DJIA, +0.18% — which counts Intel as a component — has declined 1.9% and the S&P 500 index SPX, +0.19% has gained 1.6%. Read More Intel stock falls after Bernstein says shorts have a good case : https://ift.tt/2KjORJLIntel’s decision to fire CEO Brian Krzanich for his decision to engage in a consensual violation of company policy has sparked a raft of think pieces on the topic, including those revisiting Intel’s current market position and its relative strength against companies like Qualcomm and AMD. One argument making the rounds is that Intel’s continued insistence on primarily manufacturing its own chips is causing problems for the company. But is it true? First, let me say this: I don’t think it’s crazy to see a link between Intel’s recent announcement that it would delay 10nm into 2019 — possibly even the back half of 2019 — and Krzanich’s dismissal. I have absolutely no inside information on this topic, and it’s possible that Intel would’ve let Krzanich go even if 10nm had executed flawlessly. But 10nm didn’t execute flawlessly, and that failure is going to have consequences. Is focusing on manufacturing chips for other people the answer for Intel? I’m not sure. I want to make it clear that I’m drawing a distinction between Intel’s failure to adapt its own manufacturing model to the needs of the lower-cost mobile market and the question of whether Intel should try to serve as a general purpose foundry for other manufacturers. We’ve previously discussed how Intel was unwilling to modify its fabs to compete with TSMC on cost and manufacturing techniques, and pursued a strategy that kept Atom’s prices higher and forced the company to ship hardware contra-revenue. There’s no doubt that the company failed in its efforts to enter the mobile market. But the argument that Intel should be trying to build chips for other companies falls a bit flat when you consider the reasons why so-called “pure play” foundries exist — specifically, they exist because in the past, before TSMC was founded, trying to buy capacity at IDMs (integrated device manufacturers) that built primarily for themselves raised real questions of conflict of interest, and whether your partner might attempt to take advantage of IP you shared with them for manufacturing purposes. The fact that this system didn’t work so well is why TSMC and later foundries enjoyed tremendous success for decades. The argument that Intel’s integration has become harmful is laid out in an excellent article at Stratechery, but the basics of it are this: Intel faces competition from the remaining pure-play foundries — GlobalFoundries, Samsung, and TSMC. The success of those foundries in moving to 7nm while Intel struggles with 10nm is evidence that Intel has been outmaneuvered by these three companies, who are pushing into new markets while Intel struggles. Its 10nm node is delayed. It canceled its Knights Hill Xeon Phi chip. It’s working on new GPUs to replace the technology that has largely stagnated since Skylake, and its returned to the 14nm well to once again attempt to wring fresh performance out of its cores, all while companies like ARM are moving ahead with chips like the Cortex-A76. These events definitely represent a threat to x86 and Intel. But there are some historical factors to keep in mind as well. Don’t Count Intel OutBack in 2005 Intel looked like a bad joke. From 2000 to 2005, Intel saw its chipset market share sag as VIA took a huge chunk of the Pentium 3 chipset market. Its attempt to dominate the memory industry with RDRAM and a Rambus partnership blew up in spectacular fashion. The original Willamette Pentium 4 was worthless, and while Northwood blew the doors off AMD, Prescott promptly appeared and demonstrated that all the P4 critics were right — it just took a few years for the rotten fruit of the Netburst architecture to truly show its colors. When dual-core Pentium 4’s finally launched, they looked wretched next to AMD’s dual-core Athlon 64 X2’s. For the first time, in every benchmark suite or category one could name, AMD could claim the performance crown. Outside of a bare handful of specific applications, there were no tests where the Pentium 4 Smithfield won. As ExtremeTech wrote at the time:
Fourteen months later, Intel launched the Core 2 family and dominated the PC industry for the next 11 years, until the launch of Ryzen. These comparisons and issues can change, and they can change on a dime. Silicon Scaling, Server StrategiesThe other major factor that plays into this situation is the question of whether anyone can find meaningful ways to accelerate performance past anyone else as the great silicon scaling train slowly winds down. We’ve already discussed a bevy of problems facing the industry at 3nm. EUV integration continues, but there’s a certain amount of “We’ll fix it in post” thinking powering that effort. Increasingly, the future of silicon looks like one in which every ISA, architecture, and approach to building CPUs winds up stuck on the same performance and power curve, with only minor differentiation between them. If this happens, the scales could tilt even more against Intel — if all silicon is the same, and price becomes the only differentiator, you can bet companies will swiftly standardize on price. For now, x86 can avoid this fate by leaning on the mother of all vendor optimization strategies. Windows may offer some x86 emulation to entice buyers towards low-end Snapdragon 835 systems, but nobody looks at those systems and thinks they’re competitors for the x86 consumer systems that Intel sells. At the same time, announcements like the Snapdragon 850 and Snapdragon 1000 are evidence that Intel could face competition higher up in the product stack in 2019 and beyond. But just as Intel’s strategy for AMD once involved giving the company the lowest-end of the consumer market and constraining it from everything else, the firm seems to have a plan for dealing with ARM’s potential encroachment into the consumer space — by focusing on other markets. Talking about ARM’s threat to Intel in the consumer space feels a bit like arguing over a decision that’s already been made. Intel took consumer PCs out of its own core business pillars. Microsoft has reorganized Windows as one component of Azure. It’s clear that the WinTel Alliance no longer views consumer hardware as its own primary play. Instead, both Microsoft and Intel are moving towards servers, data centers, cloud computing, and other endeavors. The above is Intel’s Q1 2018 operating income. Client computing still accounts for the largest revenue share, with $8.2B in sales and $2.7B in profits for an operating margin of 34 percent. Data centers accounted for just $5.2B in revenue but $2.6B in profits, for an operating margin of 50 percent. But Intel CCG operating revenue fell by $240M in Q1 2018 compared with the year previous. The reason nobody really noticed is because data center operating income rose by $1.15B at the same time, alongside IoT (operating income up 2.16x). A glance at the operating income sheet tells the story of where Intel believes its future lies, and it isn’t in consumer hardware. It’s servers, data centers, the IoT, and non-volatile solutions like Optane (which Intel is working to integrate into systems as a must-have feature, even when we strongly disagree with that messaging). Far from moving to open its fabs up, Intel is working to attract new customers less affected by chip commoditization trends. The company’s attempts to win customers on the foundry side simply haven’t enjoyed that much success; after a prominent announcement about LG as a customer for 10nm, we haven’t heard more from Intel on this side of the business. If Intel was enjoying much success in attracting foundry customers, we’d have heard about it already. It’s possible that Intel’s fabs and investment in its own integration represent a kind of straitjacket that the company now struggles to escape. But short of selling its own fabs, spinning them off into their own company, or building all-new facilities intended to compete with the Samsung, GF, and TSMC’s of the world, it’s not clear what Intel can do to meaningfully address this problem. It doesn’t seem to have attracted more customers to its existing foundry efforts and it bought Altera, it’s one major customer. Rather than divest of its own foundries, Intel appears to have taken a different tack, and is focusing on winning space and business in markets where higher costs are more accepted and firms are willing to pay premiums for advanced products and features. Despite the failure of its manufacturing division to deliver 10nm, Intel still builds the most complex microprocessors on the planet with the highest number of transistors and cores integrated into a single monolithic block of silicon. That expertise is worth tens of billions of dollars to Intel, and it’s understandable that they’re loathe to tear up a business model that’s worked so successfully for over 30 years. But I suspect Intel’s answer to the integration problem some have observed is precisely the pivot to data center and certain segments of IoT where it hopes to compete in new, less commoditized spaces, thereby spinning its expertise in design into products other companies can’t match. That could well turn out to be the wrong answer — but it is an answer. Read More Does Intel Have an Integration Problem? : https://ift.tt/2tBscy4Stocks grabbed quick gains at Tuesday's open, as global action reflected some resilience after trade war fears spurred broad losses on Monday. XLennar (LEN) led an early rally among homebuilders and Netflix rose on new analyst coverage. General Electric (GE) topped the S&P 500, and several IBD 50 stocks showed strong early action. Meanwhile, Intel (INTC) deepened its recent losses. The Nasdaq Composite led, up 0.2% as MercadoLibre (MELI), Take-Two Interactive (TTWO) and Activision-Blizzard (ATVI) hauled the the Nasdaq 100 higher. The Dow industrials and S&P 500 quickly narrowed their early gains to less than 0.1%. Intel weighed on the Dow. Akamai Technologies (AKAM) and Incyte (INCY) posted the heaviest losses among S&P 500 stocks. The dollar was mixed, bonds inched higher with the 10-year yield down 1 basis point to 2.87%. Oil prices leaned higher, with West Texas Intermediate trading above $68 per barrel and Brent crude above $75. Top Indexes Mixed For JuneMonday's session showed markets beginning to grapple with the bite of the Trump administration's street-fight method of restructuring international trade. The session sent some troublesome indicators for the market, but the major indexes remain only mildly mixed for June. The Dow is now down 0.7% in June and testing its 200-day line of support for the third time since April. Notably, Monday marked the Dow's first close below that line since 2016. If the index cannot regain its 200-day line, the consolidation could be set to move into deeper, more extended territory. The S&P 500 is still on positive ground for the month, up 0.4%. It is just below its 50-day line, still well above the 200-day level, and 5.4% below its high set in January. The Nasdaq is also positive, up 1.2% in June. It was down 3.5% since chalking up a new high on Wednesday. The index is still holding above its 50-day moving average. Global: China Down, Japan Flat, Europe RisesMarkets in Asia tapped the brakes after their heavy sell-off on Monday. China's markets closed with nominal losses on Tuesday. Hong Kong's Hang Seng index slumped 0.3%. The Shanghai Composite stepped back another 0.3%. In Japan, Tokyo's Nikkei 225 managed a flat finish, after recovering from an early 1% dive. Europe's markets held their early gains in afternoon trade. London's FTSE 100 advanced 0.7%, Frankfurt's DAX rose 0.2%, and the CAC-40 in Paris battled to a 0.4% gain. Intel Dives; Netflix, GE, Lennar LeadGeneral Electric was a big early leader, up 6.9% after adding its healthcare division and its stake in oilfield services giant Baker Hughes (BHGE) to its accelerating divestment scheme. The company lost its place on the Dow industrials list last week. Baker Hughes shares rose 0.8%. Homebuilder Lennar spiked nearly 8% after reporting a better-than-expected 78% earnings surge and a 67% rise in revenue for its fiscal second quarter. Deliveries leapt 57% and new orders rumbled ahead 62%, while the company's backlog expanded 92%, to 19,622 homes. Lennar shares dropped 3.9% in heavy trade Monday. The stock is down 32% from a January high. Other homebuilders also rose, with Pulte Homes (PHM) up 1.7%, D.R. Horton (DHI) jumping 3.3% and KB Home (KBH) notching a 3% rise ahead of its fiscal second-quarter report, due late Thursday. Netflix clocked an early 2% gain, rising after Imperial Capital initiated coverage on the stock with an outperform rating and a 503 price target. The IBD Leaderboard stock dropped 6.5% in heavy trade on Monday. The stock broke some short-term levels of technical support, but remains extended from a breakout in May. Chip leader Intel dropped 1.4%, the deepest early loss among Dow industrials. Benchmark initiated coverage on the stock with a hold rating, as the company continues to deal with fallout from last week's sudden ouster of Chief Executive Brian Krzanich. Akamai Technologies dropped 3.4% after trimming its earnings and revenue guidance for the second quarter. Earnings guidance remained within the range of expectations, but the lowered mid-point of the updated revenue guidance was below the consensus target. Akamai dropped 3% in heavy trade Monday, stopping short of triggering an automatic sell rule below a cup-with-handle buy point at 77.69. IBD Stocks: ZTO Express ReboundsAmong IBD 50 stocks, China's ZTO Express (ZTO) rebounded 1.8% in opening trade. The stock ended 0.6% lower Monday, trimming its early loss aggressively after finding support at its 10-week moving average. The move stopped short of a retest of an 18.18 buy point in a cup base. China's Momo (MOMO) led early declines among IBD 50 stocks. Momo dropped 5.1% after the company announced it would offer $650 million in debt. Shares fell 5% in modest trade Monday, leaving the stock 11% off its June 11 high, and still extended after a breakout in May. Housing Price Growth Slows In AprilTuesday's economic calendar is fairly light. S&P Case Shiller's April Housing price index slowed to a 0.2% increase in April. That was down March's 0.5% growth, undercutting expectations for another 0.5% gain. The Conference Board reports June consumer confidence at 10 a.m. ET. Atlanta Federal Reserve Bank President Raphael Bostic speaks at 1 p.m. Dallas Federal Reserve President Robert Kaplan speaks at 1:45 p.m. ET. YOU MIGHT ALSO LIKE: The Big Picture: Trump Bull Gets Bloody Nose; Eye This Sell Signal Is Trump About To Blink In China Trade War? Bears Take Control, Slap Down All But Two IBD 50 Stocks IBD Stock Of The Day: This China Internet Gives Back All Its Gains Read More Stocks Bounce: Netflix, Homebuilders Rally; Intel Dives : https://ift.tt/2KbU0nVShares of Intel Corp. INTC, -3.41% are down 1.9% in premarket trading after Bernstein analyst Stacy Rasgon downgraded the stock to underperform from market perform. He had upgraded the stock to market perform after Intel's last earnings report based on his assumption that the data-center group would continue to post strong growth, but Rasgon said he has been "regretting that upgrade; not necessarily from the perspective of the stock, but rather that it is becoming increasingly apparent that the structural issues we have promulgated for years are becoming ever obvious to investors." The leadership transition at Intel, following the resignation of Chief Executive Brian Krzanich last week, limits "upside risk," according to Rasgon. He wrote that Intel's multiple fell after Krzanich said he was stepping down. Rasgon lowered his price target on the stock to $42 from $54. Shares are up 49% over the past 12 months, while the Dow Jones Industrial Average DJIA, -1.33% has gained 13%. Read More Intel stock falls after Bernstein turns bearish : https://ift.tt/2yGj5BO[unable to retrieve full-text content]
There's a long list of people that insiders are talking about. but there's another obvious candidate people gaining some attention as a potential new chief executive, too: VMware CEO Pat Gelsinger. Gelsinger left Intel in 2009 for EMC after a 30-year career there. At Intel, Gelsinger rose to become Intel's first CTO. During his time there, he was mentored by Andy Grove, a legendary former CEO at Intel. That definitely gives Gelsinger the pedigree for the job. On the other hand, he was reportedly in this same spot before — Gelsinger was said to be in the running for the Intel CEO job in 2013, though the board ultimately chose Krzanich. So, when CNBC anchor Jon Fortt tweeted that Intel's board should go after Gelsinger, Gelsinger replied that he wasn't interested, tweeting, "Thanks for the shout out, @jonfortt but I love being CEO @vmware and not going anywhere else. The future is software!!!" For the record, you can't take it at face value when the CEO of a public company announces that they're not interested in a new job. If Gelsinger were to indicate he wanted the job, or even if he stayed silent and let the speculation mount, VMware's board of directors would have likely been unhappy. Witness what happened with Meg Whitman. She said multiple times in public that she wasn't interested in the then-open role of CEO of Uber, and that she wasn't "going anywhere." But then she was outed as a candidate who did interview for that job. And shortly after, she resigned from HPE and joined a tiny media startup. So it's likely that when Gelsinger's name came up as a possible candidate for CEO of Intel, it caused his boss Michael Dell at least some cause for doubt. Dell, the billionaire CEO of the epynomous tech titan, owns EMC, which in turn has a controlling stake in VMware. In other words, Dell has reason to watch Gelsinger's reaction carefully. Only an hour after Gelsinger tweeted his disinterest in the job — in the wee hours of the morning, no less — Dell used his own Twitter to send a public love-note to Galsinger in reply: A cartoon that said "You're the best." Despite the public love-fest between these two executives, they are also locked in a boardroom battle of sorts, as Michael Dell continues to float the idea that he may swoop in and have the company do a reverse merger with VMware. In that scenario, Dell would go public by subsuming VMware, and VMware would be a Dell subsidiary. If that were to happen, it's easy to see Gelsinger looking around for his next CEO opportunity, rather than sticking around to run a business unit under Dell. And going to Intel would mean trading up from a public company that earned about $8 billion in revenue in 2017 to one that earned nearly $63 billion in the same period. Gelsinger would also bring with him his spotless reputation to help repair any damage done by Krzanich's personal choices. That said, Gelsinger's been out of Intel's business for nearly a decade now and didn't land the job the last time his name was publicly bandied about as a candidate. Intel's board may want to go forward with fresh blood, rather than backward to experience. Read More VMware CEO Pat Gelsinger says he's not interested in the Intel CEO job, and his boss Michael Dell seems glad to hear ... : https://ift.tt/2Mqkz59Microsoft, Mozilla veteran will also handle external researcher workIntel has recruited noted computer security exec Window Snyder into its ranks to help improve its fortunes in the cybersecurity space. Chipzilla said effective July 9, Snyder, formerly the chief security officer at Fastly, will be its new software chief security officer and vice president and general manager of the Intel Platform Security Division. Among Snyder's duties in her new role will be working with operating system vendors and third-party researchers for "industry sensing" efforts to get Intel's security products working with new and future OSes. "In this role with Intel, Window will be responsible for ensuring the company maintains a competitive security product roadmap across all segments in support of business group objectives and continues to engage with the external security ecosystem to apply industry trends and sensing to Intel roadmap differentiation," Doug Fisher, Intel senior VP and GM of the software and services group, said today. Prior to Fastly, Snyder Spent five years with Apple's OS X and iOS security divisions, and headed up Mozilla's security operations for two years as "chief security something or other". She also spent three years as a security strategist with Microsoft. Meet TLBleed: A crypto-key-leaking CPU attack that Intel reckons we shouldn't worry aboutREAD MOREThe hiring comes in the middle of what has been, to say the least, a difficult year for Intel on the security front, at least in terms of optics. In early January, El Reg kicked up details on three major data-spilling security flaws, dubbed Spectre and Meltdown, that were present in Intel's microarchitectures, and Chipzilla was subsequently ripped for its handling of the situation. By May, details emerged on another class of side-channel vulnerabilities present in Intel's CPUs, and in June yet another bug was found that could potentially cause programs to leak encryption keys and other sensitive information. The Snyder hiring is also a sign that Chipzilla isn't going to put its business on hold while it searches for a new top boss, following the shock departure of CEO Brian Krzanich last week. ® Sponsored: Minds Mastering Machines - Call for papers now open |
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January 2020
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