Intel: Rumors, Rumors

Intel (INTC) has an interesting rumor circulating that claims the new Google (GOOG) Nexus 7 will have an Intel Bay Trail as the Application Processor (AP). The Bay trail is the first AP to use the new Intel low power, high performance Atom microarchitecture code named Silvermont. If you were to order one of these little sweeties it would be called an Atom 3xxxxx.

Is everyone thoroughly confused now? Cores, platforms, code names, actual part numbers; could Intel make things any more mysterious?

Anyway, the rumor appears to have originated in China and is being repeated by every rumor monger with a heartbeat.

Is the rumor plausible?

Could be. The Bay Trail is at least a competitive platform based on power consumption and compute performance. And, according to Intel, the Bay Trail will be subsidized by Intel in order to gain a 40 million unit market share in 2014.

These are the most often mentioned rationales for an Intel powered Nexus 7.

Some less mentioned reasons are:

1. The Bay Trail can run Android, of course, and it can run Chrome, and it is unique among all APs in that it can also run Window 8 and, presumably, the Microsoft (MSFT) office suite. Next you have to noodle on why Google would allow a Google branded device to run Window 8. Maybe the better question is, "Why not?" It is unlikely that a Nexus 7 would come loaded with Windows 8, so there isn't much risk there. The selling point of universal OS support might outweigh any risk with regard to Microsoft. Corporate users would love the cross OS flexibility.

2. There is a long forgotten 2011 Intel/Google cooperative relationship to "work to enable and optimize future versions of Android™ for Intel's family of low power Atom™ processors." The Bay Trail IS the future low power Atom, after all. The link comes from the Intel website, so presumably the cooperative agreement is still operative.

So yes, the rumor is perfectly plausible from a variety of viewpoints. Does plausibility of the rumor make it true? Not necessarily. We hear rumors like this all the time.

On the other hand it is hard to find a specific catalyst for the recent strength of the Intel share price. If the rumor does turn out to be true, it will drive the Intel share price up $2-3 per share quickly, which will start an avalanche of short covering and further price increases.

There is a rash of events coming in early January that could affect Intel. On January 6, CEO Brian Krzanich is doing the opening keynote address for the Consumer Electronics Show. On planet earth, these are not the venues to cry the blues and discuss company weaknesses; SOMETHING positive will come from this address.

A couple days later the third party market guys will report PC Sales, which have shown recent signs of being "less bad" during the fourth quarter and may actually turn out to be "more good" for the finished quarter. That would be more reason for the 225 million shares short to get covered. Then on January 16, Intel reports earnings. I have a feeling that the company re-set expectations quite low last quarter and if PC sales are "more good" we could be in for a positive surprise.

Conclusion:

Rumors aside, after a couple of years when it would be wise to be on the sidelines for Intel earnings announcements, we might be at a point where it would be wise to be "in" during earnings.

Source: Intel: Rumors, Rumors

Disclosure: I am long INTC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

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