CREDIT SUISSE: Intel won't see a near term earnings impact from Spectre or Meltdown

  • Two major flaws in how modern computers process information has sent the tech world scrambling for a fix.
  • Amid the scramble, Intel, the company most affected by the flaws, has seen its stock price slump.
  • But, as the company prepares to report earnings soon, one analyst thinks the company will be fine in the near term.
  • Watch Intel’s stock price move in real time here.

Spectre and Meltdown, arguably the two biggest flaws ever found in modern computers, might not have a big impact on the near-term earnings of Intel, the company hit the hardest by the flaws.

At least, that’s the thinking of John Pitzer, an analyst at Credit Suisse.

“While our calendar first quarter estimates embed NO negative impact to revenue from the Meltdown/Spectre security issues – near term we would highlight that the uncertainty created could cause at least some calendar first quarter server/client purchases to be deferred as IT managers look for more clarity,” Pitzer said in a note to clients.

Spectre and Meltdown are flaws in a technique modern CPUs use to speed up computing. There are three total variations of the two flaws, and Intel is the only company whose chips have been reported to be affected by all three. The company has seen its share price decline about 8.73% so far this year after the flaws were disclosed publicly.

Pizter previously released a report the day after the flaws were disclosed that claimed everyone was making “mountains from molehills” regarding the flaws. A lot of new information about the flaws has surfaced since then, but Pizter is holding his ground, saying Intel’s near-term revenue largely won’t be affected.

There have been confusing and conflicting reports around the flaws since their public disclosure, however. AMD, which is Intel’s main rival in the space, initially said its hardware would not be affected by the flaws, and later reversed its stance. Nvidia, which makes GPUs, created confusion when it issued Spectre and Meltdown patches for its products which were thought to be impervious to the flaws. Nvidia later clarified that its patches were only precautionary, and its products are not affected.

Patches to fix CPUs affected by the flaws were initially thought to slow down certain programs by as much as 30%, and an exact impact on performance has yet to be determined. Pitzer said IT managers and big data centres could delay planned purchases of Intel chips until more clarity is found, and the long-term effects of the flaws for chipmakers won’t be evident for some time.

If certain companies’ chips are found to be faster than others after all the final Spectre and Meltdown patches have been issued, there could be a sector-wide shift to the faster chips, Pitzer said.

Pizter has a “neutral” rating on Intel, but said it’s mostly because he thinks the company is too expensive right now, not because of the potential risks associated with Spectre and Meltdown.

Intel reports fourth quarter earnings January 25, and Pitzer thinks the results will fall in line with Wall Street’s expectations. Pizter is expecting earnings per share of $US0.86 on revenue of $US16.3 billion.

Read more about Intel’s place in the Spectre and Meltdown fiascos.

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