Mohacsy's Safe Portfolio Member Forum

[dexprs]

Intel earnings: What to expect from the chip maker
MARKETWATCH 10:29 AM ET 10/14/2016
Symbol Last Price Change
INTC 37.5393 +0.5693 (+1.54%)
QUOTES AS OF 11:21:33 AM ET 10/14/2016
Intel's (INTC) data center business set to shine as consumer hardware stagnates

Intel Corp. (INTC) will likely show some growth in its key data center and PC businesses when the company reports fiscal third-quarter earnings after the market closes on Tuesday.

Intel (INTC) continues to focus on high-growth areas, such as data centers and Internet of Things (which includes its recent autonomous car push (http://www.marketwatch.com/story/mobileye-intel-to-build-fully-autonomous-bmw-cars-2016-07- 01)) that utilize new technologies such as the cloud, while distancing itself from the weakening PC and commoditizing smartphone markets. But the company raised its revenue forecast for the quarter last month (http://www.marketwatch.com/ story/intel-boosts-guidance-on-laptop-pc-demand-2016-09-16), citing some improvements in PC demand.

Here's what to expect:

Earnings: Sell-side analysts surveyed by FactSet expect Intel(INTC) to report a profit of 73 cents a share, compared with 64 cents in the year-earlier period. Contributors to Estimize, a software platform that uses crowdsourcing from hedge fund executives, brokerages and buy-side analysts to predict earnings, also expect Intel(INTC) to report earnings of 73 cents a share. The company has a long history of beating both the Estimize and FactSet consensus estimates, having topped the FactSet number in each of the last six quarters, and beating Estimize in the past five.

Revenue: The company is expected to report revenue of $15.6 billion, compared with $14.5 billion in the year-earlier period, according to both the FactSet and Estimize numbers. Intel(INTC) fell short of both the FactSet and Estimize sales consensus in the past two quarters, but beat them in the three quarters prior. In July, the company forecast revenue of $14.9 billion for the third quarter, but it raised that forecast to $15.6 billion (http://www.marketwatch.com/story/ intel-boosts-guidance-on-laptop-pc-demand-2016-09-16) in September, citing "some signs of improving PC demand."

Also Read: Intel(INTC) names former eBay financial chief as new CFO (http://www.marketwatch.com/story/intel-names-former- ebay-financial-chief-as-new-cfo-2016-09-19)

Stock reaction: Shares of Intel(INTC) have increased 6% in the last three months, outperforming the Dow Jones Industrial Average , which is down a little more than 1%. They have also outperformed the Dow on the year, rising 16% versus 6% for the index. The average rating on the stock is the equivalent to buy, while the median 12-month price target on the stock among a poll of roughly 40 analysts is $37.47.

(https://sw.graphiq.com/w/62fjcgWRYfr)

What to watch for: Pacific Crest analyst Michael McConnell, who has an overweight rating on the stock and a 12-month price target of $44, said he expects Intel(INTC) to show "reacceleration" in its data center group this quarter, as well as provide some optimistic commentary surrounding its mobile and PC businesses, which have been weak for several quarters.

Earlier this month, IDC reported a 4% year-over-year decline in world-wide PC shipments (http://www.marketwatch.com/ story/chromebooks-destroyed-apple-in-back-to-school-shopping-2016-10-11) to 68 million units, though that was slightly ahead of its projections. Last month, Intel(INTC) said replenishment of PC supply chain inventory was helping to drive quarterly demand. Intel(INTC) also won a contract recently with Apple Inc. (AAPL) and has some of its chips in the new iPhone 7.

Last quarter, revenue from Intel's(INTC) data center group rose 5% on a year-over-year basis to $4 billion. Data centers are Intel's(INTC) second-largest source of revenue after its client computing group, which includes mobile devices and PCs, but sales growth has underperformed in the past three quarters. Sales in its client computing group, meanwhile, fell 3% year-over-year to $7.3 billion.

For the fourth quarter, McConnell said he expects Intel's(INTC) guidance to exceed consensus estimates.

"With improving PC demand now built into the stock, data center group results and guidance will be the focal point for investors," he said.

-Jennifer Booton; 415-439-6400; [e-mail]


(END) Dow Jones Newswires
10-14-161029ET
Copyright (c) 2016 Dow Jones & Company, Inc.