Big Upside for Intel Stock
Intel Corporation (NASDAQ:INTC), the global leader in PC processors and semiconductors has a bullish path thanks to new products and advertising. If the research firm Gartner is right, then Intel stock could see much better days in 2016 and 2017. Gartner expects the PC market to grow four percent in 2017, which implies a significant increase in demand for Intel products. (Source: “Worldwide Device Shipments to Grow 1.9 Percent in 2016, While End-User Spending to Decline for the First Time,” Gartner, January 20, 2016; http://www.gartner.com/newsroom/id/3187134.)
But it’s not all about PCs. Intel has just acquired the Israeli start-up Replay Technologies for an undisclosed amount (believed to be between $150 million and $175 million). This will give Intel a prime spot to profit from the increasing digitization of sports stadiums and 3D broadcasting around the world. (Source: “Intel acquires Replay Technologies, sets sights on 3D sports broadcasting,” Arstechnica, March 9, 2016.)
INTC stock went up by close to 1.5% on the news. However, the Replay Technologies acquisition is part of Intel’s plans to profit from the trend to digitize sports broadcasting and viewership. The idea is to use high computing power to improve the way home viewers experience a sports event. The technology makes images and sensations more realistic and immersive.
Replay Technologies may be a small company, but the company’s 3D video reconstruction of sporting events has strong revenue-generating potential. Founded in 2011, Replay Technologies makes 3D video renderings of sports events thanks to the use of 28 ultra-high-definition cameras positioned around one stadium. Broadcasters can then offer TV or Web viewers a 360-degree view of a sports event, game, or match. The point is to offer the viewer the opportunity to explore a match under every conceivable angle.
The integration of Replay Technologies within Intel should be smooth. Intel and Replay Technologies have worked together since 2013. Together, the companies respectively meshed the computing power of processors with 3D video reconstruction algorithms. You may have already seen the effects of their partnership if you were one of the millions of people who watched the NBA All-Star Weekend in Toronto, Canada, February 12–14, 2016. Replay’s technology allowed the video technicians to stop the image and rotate in all directions to explore the stage from all angles.
Overall, the Replay Technologies acquisition is part of Intel’s effort to re-invent itself. The company is entering new branches of technology, taking advantage of popular trends with wider technological reach. This is another step toward in that strategy.
For example, Intel has developed a strong interest in drones. Last year, Intel worked with QUALCOMM to improve the experience of the latest high-definition cameras fitted on drones. (Source: “Intel pours $60 million into drone maker,” Fortune, August 28, 2015; http://fortune.com/2015/08/28/intel-invests-in-drone-maker/.)
Another example of Intel’s strategy is its partnership with Microsoft to revive the fortunes of PCs. While the jury is out on the technical accuracy, the new ads imply PCs (using “Windows 10”) are more capable than Apple’s “Macs.” (Source: “Microsoft’s New Ads Say PCs ‘Do More’ Than Macs,” Fortune, February 29, 2016.)
The advertising wants to show that new PCs are far more capable than machines that customers are using at home or at work. As it introduced its latest generation of processors a few weeks ago, Intel explained that more than 500 million computers currently in use are between four and five years old or even older, highlighting the advantages of its new microarchitecture. These include increased performance, longer battery life, and better graphics than a typical computer offered five years ago.
The new ad campaign borrows from Apple in that it will be imaginative and present the new technology in appealing and entertaining way to the benefit of Intel’s sales and INTC stock’s price.