Intel's Mobile Restructuring Could Be More Crucial Than M&A, BofA Says

In a report published Friday, BofA Merrill Lynch analysts maintained a Buy rating on

, with a price objective of $38. Recent media reports suggested that Intel is considering acquiring

. The analysts believe that such a deal "could drive very modest ~0-2% accretion." The market perception is that Intel needs Altera's FPGA to defend its core data center business. However, the analysts pointed out, "FPGA is useful in only a handful of workloads as a co-processor/accelerator, and similar functionality could be provided with Intel's own Xeon Phi, or with an Nvidia GP-GPU, or with other ASIC alternative." Intel's growth prospects could be driven by efforts to carve a niche for itself in the mobile processor market, which is currently dominated by large players like

and

and several Chinese SOC vendors. "In our view, we believe a more accretive option would be to accelerate efforts in the mobile segment which currently depress EPS by ~50c or 23% in 2015E, and likely another 15%+ next Year," the analysts added. Although Intel may choose to adopt both the options: carry out an acquisition and work to reduce mobile losses, the analysts expressed concern that "any large-scale M&A could distract the company from what we believe could be the more accretive option."