NEW YORK (TheStreet) -- Intel (INTC) was falling -1.2% to $26.10 Monday following a report that chip prices are causing companies such as Google (GOOG) and Facebook (FB) to explore other options for their servers.
According to The Wall Street Journal, the average price for Intel's server chips grew to $629 in the first quarter, compared to $429 in the same quarter of 2007, a 47% increase. Other chips tend to fall in price over time, such as Intel's mobile computer chips falling 33% to $88 in the same period. Intel told the Journal, however, that it hasn't raised prices for server chips, but that companies prefer higher-end models.
Intel chips currently account for 97% chips used in most popular servers, giving companies that run those servers little leverage in pricing talks.
Some companies such as Google and Facebook are currently exploring other options for server chips as a result of the current situation.
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TheStreet Ratings team rates INTEL CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate INTEL CORP (INTC) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."