"Apple has been evaluating Intel's model for a while," Richard wrote. "We now believe that Intel will capture roughly 50% of Apple's modem business in the upcoming iPhones due to launch September 9th."
The analyst continued, "Further, assuming a 50% share of modem business in the new iPhones we estimate that this win could represent $750M to $1.25B in revenue for Intel in CY16. This is a marque win for Intel and would go a long way to reducing the mobile business losses."
While the Northland analyst believes Apple may use Intel's SoFia modem in the new iPhone, Richard noted that Intel may be hurt by Alibaba (BABA) and other major Internet companies switching their servers to chips based on the ARM (ARMH) architecture from Intel's x86 chips.
Northland maintained its "market perform" rating for Intel.
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 few notable 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 largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- INTC's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.31, which illustrates the ability to avoid short-term cash problems.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, INTEL CORP's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for INTEL CORP is currently very high, coming in at 78.60%. Regardless of INTC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 20.50% trails the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.6%. Since the same quarter one year prior, revenues slightly dropped by 4.6%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- You can view the full analysis from the report here: INTC Ratings Report