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mickey: 1/10 of 1% of 1 trillion is 1 billion, not 9 billion.
Mickey, be realistic -- no analyst would project so far in advance of an unknown.
Why don't we just say that IDCC would have 505 of the market and have 500 billion ! ! !
Don't count your chickens before they are hatched! Lets get to $85 per share and then $90, and then $100.
One step at a time ! One day at a time! 1 Year at a time.
What is happening behind the curtains?
Maybe today is the Board meeting and they are declaring a $5.00 special dividend, and a 3 for 1 split !
That's maybe because they have a new licensee or 2 that were signed over the weekend and are about to announce the news.
OR, maybe LG and ZTE have signed their license renewals amd there is a tone of back monies being collected!
Who knows ! ! ! Oh to be a 'Fly on the Wall' at the IDCC headquarters!
Maybe it is who knows how to properly document a patent.
The special dividend was at the time when the next year, the 'anticipated' dividend tax rate was going to increase.
Companies were condiderate in paying dividends early and in some cases declaring special dividends, as did InterDigital.
As it turned out, there was no rate increase on dividends for tsx purposes.
PAST SPECIAL DIVIDEND information:
EX DIVIDEND DATE 12/13/2012
AMOUNT (INCLUDING REGULAR DIVIDEND $1.60
DECLARATION DATE 12/2/2012
RECORD DATE 12/17/2012
PAYABLE DATE 12/28/2012
I missed it too; goi signed in at 9:03 and Meritt was talking about Avante but I couldn't grasp what he was saying.
just enede at 0:04 AM CDT
Webcast going on right now
go to IDCC WEBSITE
CLICK ON investor
There should be a box on right side LISTEN TO WEBCAST
mickeybritt: Who do you think would sign a license with IDCC prior to year ene?
nokia/Microsoft, ZTE. Xiongi, LG and others are not budging or breaking down the doors to sign.
Our BEST IN CLASS sales team is on vacation till 2017 when they collect their 2016 compansation bonuses.
my3sons87. Boy, I sure hope that manqagement thinks the same way as you (and I).
Sign a long term *10 to 15 year) contract for future G's, include a percentage (3 to 5%) increase every 3 years, and include a 'token' paymebnt for past royalties.
Too bsd they couldn't include in the computer code something like "... if the device is ZTE, Microsoft, Nokia, LG, Xiong, and other infringers or non-licensed manufacturers and companies, then END THE ATTEMPT TO CONNECT'".
If the users got kicked off and their phoned didn't work, can you see the issues the Verisons, AT&T, Sprint, T-Mobile, Cricket, Cellular One, etc. etc. would have from their users and the pressure that it would put on them to license!
Better yet, think of the phones Samsung, Huawei, and other IDCC licensed companies would sell, knowing that they have licensed and are in good standing. It would cripple the industry but you would sure get a list of those who 'use without paying' our software. I think there would be grat pressure to sign with IDCC.
Something has got to be done to get them to the table. We need some brilliant genius to come up with a plan to get our dues.
JMO
re: All time highs: for past 10 years (don't know about the 1999 era)
Intra-Day high
date 07/21/11
high 82.50
CLOSING HIGH
date 10-24-16
high $80.80
Well, we reached the $80th floor again in less than 30 days after the CC and $11 haircut.
No new licenses, no settlements, no news that caused the shares to move back up EXCEPT that the company's shares did it on its own again, despite failure of our best in class sales team to produce ANY results.
Mr. Chairman, members of the Board, I propose a special dividend of $2.00 per share, payable December 23rd, to shareholders of record November 28th.
All shareholders in favor say Yes (applause, cheers and a resounding YES ;
any opposed say NO (dead silence, and the Board heard a pin drop way in back of the boardroom.
Unanimously approved! ! ! !
GO IDCC.
InterDigital to Present at NASDAQ 35th Investor Program
Company Release - 11/22/2016 8:30 AM ET
WILMINGTON, Del., Nov. 22, 2016 (GLOBE NEWSWIRE) -- InterDigital, Inc. (NASDAQ:IDCC), a mobile technology research and development company, today announced that the company will be presenting at the NASDAQ 35th Investor Program in London on November 29, 2016. The presentation will take place at 2:30 PM GMT, and will be webcast live and accessible through the Investors section of the company's web site, www.interdigital.com. An archived replay of the presentation will also be available following the conference.
About InterDigital®
InterDigital develops mobile technologies that are at the core of devices, networks, and services worldwide. We solve many of the industry's most critical and complex technical challenges, inventing solutions for more efficient broadband networks and a richer multimedia experience years ahead of market deployment. InterDigital has licenses and strategic relationships with many of the world's leading wireless companies. Founded in 1972, InterDigital is listed on NASDAQ and is included in the S&P MidCap 400® index.
InterDigital is a registered trademark of InterDigital, Inc.
For more information, visit: www.interdigital.com.
my3sons87: Patience ! Have Faith ! Have Trust!
The Best in ClASS Sales team has 47 calendar days left in 2016 to get these guys licensed.
As Bill says ' ...we want to make the right deal .....'. These things take time.
We will see some fast and furious action and when it comes, it will make our heads spin.
Will Sammy buy our interests out or share royalties with us?
Curious minds need to know now!
Hmmmmmmm
WOW: Look at Hamon quote:
Harman International Industries, Incorporated (HAR)
Add to watchlist
NYSE - NYSE Real Time Price. Currency in USD
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109.70 +22.05 (+25.16%)
As of 1:28 PM EST. Market open.
Wonder what the acquisition will do for our little flea !
scooby: One has to wonder ----
Did IDCC issue any press release about the partnering?
What type of payment agreement is between IDCC and Haarmon?
How much income, if any, has IDCC recognized on our books?
Has anyone ever seen Harmon's name on any information from InterDigital in the form of partnership, royalties, agreements, patents shared by the two companies, etc. etc. etc.
One has to wonder which 'subsidiary (for lack of a better word)' is getting revenues, how much, how they are passed up to the parent (IDCC),
Or does this fall in the category of less than the benchmark and therefore we don't need to know anything about the deal?????
makes you say Hmmmmm.
Are the courts so blind or corrupt to not see the tactics used by infringers in order to avoid paying fees for using other's patents?
The fiasco of Nokia, selling its assets and rights to Microsoft, neither paying for use of patents, and then Nokia restarting its product lines via Foxconn or another OEM.
Are the agencies blind or just plain greedy by getting paid under the table?
Someone should pay, whether it is the manufacturer of the item or the company whose name appears on the product.
They can't say they don't use the patents if the makeup of the chips includes industry standards as well as patents to make the crap work.
If it walks like a duck, quacks like a duck, and looks like a duck, then IT IS A DUCK, whether uou or I breed the duck.
JMO
mister, so someone needs to do something about the lack of business from our best in class licensing
A couple of shareholder proposals on compensation might stir the hornets nest.
Something like no 'comp perks' for senior management and no raises for executives untilFoxconn, ZTE, LG, and some odf the other Tier 1 manufactueres are licensed.
Now may be the time to get it before Interdigital before the end of the year and the annual meeting.
I hope they factor OUT any money from Huawei and not include the signing of Huawei into this year's success, as it was the courts that decided Huawei needed a license.
JMO
Strike:90.00
CallsforNovember 18, 2016
Contract Name Last Price Bid Ask Change % Change Volume Open Interest Implied Volatility
2016-11-18 IDCC161118C00090000 0.21 0.00 0.65 0.00 0.00% 180 496 80.18%
2017-03-17 IDCC170317C00090000 0.35 0.35 0.55 0.00 0.00% 10 88 27.52%
2017-06-16 IDCC170616C00090000 0.95 0.90 1.20 0.00 0.00% 4 74 26.47%
Interdigital and Chicago Cubs have something in common
Both have gone through frustrations of struggling and losing but continued to fight for what they believe to be their due.
This year, Interdigital had overcome some major hurdles and were victorious. The biggest and best of the hurdles was the long-standing dispute with Huawai. Interdigital got the 'Trophy' in the form of a license agreement with Huawei.
Like Interdigital, the Cubs finally got their due -- a world series chanpionship after 108 YEARS.
For both IDCC and the Cubs, THE NEW WORDS are repeat and threepeat.
This should be OUR YEAR ! ! !
CUBS WIN ! ! ! ! !
NOW IT IS IDCC's TURN !! !
patopinion: you said
It (IDCC) aligned itself with Avanci for iot. That means our first-in-class licensing team will not be a major player.
I'm thinking that one or two suitors are secretly talking behind the scenes and closed doors with management.
If and when it is announced, it will be a very decent offer and it will come swiftly and unchallenged by anyone else. Even though a bidding war would be good for the price, I think an aggressive up-front substantial offer would be better than starting low and hoping it comes up high.
The offer will come in the form of a stock swap with some cash to boot. I am just hoping that it comes by the second quarter, 2017 after IDCC has licensed a few more companies, showing strength in future earnings.
JMO
I think back to the insiders who just sold in the upper $70's and still captured the dividend.
I wonder if any others sold this week before the downslide.
For those who sold, their timing was roght on the money! We should follow the smart money -- those who know when to sell.
JMO
bulldrz: Like you, I'm sorry I set too high of a target and missed yet another opportunity. I missed my target by $4.00. My selling point was at $85.
The bad news is I lost nearly $240,000 today; the good news is I'm still up dubstantial. I figure what I lost in market value would have paid 2/3 of the taxes I would have owed.
For once, my wife isn't as upset, seeing as how we still have substantial gains.
It's not over until its over.
JMO
dmiller: no. A $10 incrase would have been the realization that IDCC is truly moving forward with revenues, growth, potential, and other positives.
As I stated, nothing has changed with the company. Positive signs of licensing, growth, and future earnings increase are still there. No lawsuits filed against the company, no internal fraud, or anything that warrants the $10 price decline.
Has earnings call started? I get silence -- no music, talking, or anything?
This is where the SEC should investigate manipulation in the stock. Northing wrong with earnings, fundamentals, or the company in itself.
Run up over the last few months overdone? NOT IN MY OPINION. Good news, good earnings, and signs of future growth and the MM's manipulate the share price down!
F R A U D in my opinion.
JMO
Seeking Alpha says it was a miss BUT the earnings did not factor in the patent rransfer and revenues that are forthcoming in 2017.
SO, even though the projections by analysts was off by $0.02, you gotta factor in what will be brought in in 2017.
Besides, the main focus should be on RECURRING REVENUES
hEY! hEY! WHAT DO YOU SAY? The Cubs and IDCC are winners today! ! !
Yep! This IS OUR YEAR ! ! !
WILMINGTON, Del., Oct. 27, 2016 (GLOBE NEWSWIRE) -- InterDigital, Inc. (IDCC), a mobile technology research and development company, today announced results for the third quarter ended September 30, 2016.
Third Quarter 2016 Financial Highlights
Third quarter 2016 total revenue was $208.3 million, compared to $100.4 million in third quarter 2015. The $107.9 million increase in total revenue was primarily attributable to a new patent license agreement signed during the quarter. Primarily as a result of that agreement, past patent royalties totaled $124.0 million, an increase of $102.2 million compared to the same quarter last year.
Third quarter 2016 recurring revenue was $84.3 million, consisting of current patent royalties and current technology solutions revenue, a 7% increase compared to $78.6 million in third quarter 2015. This increase in recurring revenue was primarily due to an increase in fixed-fee amortized royalty revenue, partially offset by a decrease in per-unit royalty revenue resulting from decreased shipments by the company's Taiwan-based licensees.
Third quarter 2016 operating expenses were $51.6 million, a 6% decrease compared to $55.0 million in third quarter 2015. Intellectual property enforcement expenses were $3.6 million, a 45% decrease compared to $6.4 million in third quarter 2015.
Net income1 was $104.5 million, or $2.99 per diluted share, compared to $24.5 million, or $0.68 per diluted share, in third quarter 2015.
Ending cash and short-term investments totaled $781.5 million.
“This is the fifth year in a row that the continued expansion and careful management of our licensing and technology solutions programs has generated significant past sales revenue, and in three of the last four years those revenues exceeded $100 million,” said William J. Merritt, President and CEO of InterDigital. “We are continually working to expand our base of licensees, resulting in additional opportunities to build on that going forward. Moreover, this quarter and in four of the last five quarters, we reported reduced operating expenses year-over-year, highlighting our continued careful expense management and the operating leverage in our business.”
Additional Financial Highlights for Third Quarter 2016
In second quarter 2017, the company expects to recognize additional past patent royalties associated with a patent transfer in connection with the new patent license agreement signed in third quarter 2016.
In third quarter 2016, the company recorded $10.2 million of cash used in operating activities, compared to $0.7 million of cash provided by operating activities in third quarter 2015. The company used $19.3 million and $7.7 million of free cash flow in third quarter 2016 and third quarter 2015, respectively. The changes between periods are attributable to the timing of cash receipts.
During third quarter 2016, the company repurchased 0.1 million shares of common stock for $5.7 million, bringing the total number of shares repurchased under the company's current $400 million stock repurchase program to 6.7 million shares at a cost of $313.7 million.
The company's third quarter 2016 effective tax rate was approximately 32.3% compared to 36.2% during third quarter 2015. The change in the company's effective tax rate was primarily attributable to the inclusion of an estimated deduction for domestic production activities and an estimated U.S. federal research and development tax credit in the company's third quarter 2016 effective tax rate, neither of which were included in the prior year period.
Conference Call Information
InterDigital will host a conference call on Thursday, October 27, 2016 at 10:00 a.m. Eastern Time to discuss its third quarter 2016 financial performance and other company matters. For a live Internet webcast of the conference call, visit www.interdigital.com and click on the link to the live webcast on the Investors page. The company encourages participants to take advantage of the Internet option.
For telephone access to the conference, call (800) 524-8850 within the United States or +1 416 204-9702 from outside the United States. Please call by 9:50 a.m. ET on October 27 and give the operator conference ID number 5675537.
An Internet replay of the conference call will be available on InterDigital's website in the Investors section. In addition, a telephone replay will be available from 1:00 p.m. ET October 27 through 1:00 p.m. ET November 1. To access the recorded replay, call (888) 203-1112 or +1 719 457-0820 and use the replay code 5675537.
Felix: What long-term effect will the Huawei deal have on other Chinese manufacturers in terms of new royalties from unlicensed companies as well as ZTE.
ALSO, have any smaller tiered companies licensed with Interdigital now that Huawei has established royalty rates.
What revenues may be dreived from the new Google phones?
And lastly, whether Interdigital has looked at any patent sales or other business combinations with any of the major chip makers and/or other telecom giants. Maybe time for some strategic review again to establish true value of InterSDigital's patent portfolios, M2M, and IoT.
ALL TIME HIGH, I believe, was $82.00 as an intra-day high on either December 31, 1999 or the first rading day of January, 2000. As I recall, there was a trading halt on when it reopened on the 1sat business day of 2000, it fell below $75.00 and even lower at the close.
What to Look for When InterDigital Reports Earnings
The technology company's stock has been on the move. What do investors need to see to support further gains?
Nicholas Rossolillo (nrossolillo)
http://www.fool.com/investing/2016/10/26/what-to-look-for-when-interdigital-reports-earning.aspx?source=yahoo-2-news&utm_campaign=article&utm_medium=feed&utm_source=yahoo-2-news
InterDigital's (NASDAQ:IDCC) shares are up over 40% since its last earnings report, which showed improving profitability and a bright outlook, especially surrounding the company's 5G network development. Its third-quarter results are due before the market opens on Oct. 27. As you parse through the numbers and comments from management, here is what you should be focusing on.
Good news already in the books
During the second quarter, InterDigital saw revenue fall 36% to $75.9 million. However, earnings per share increased 28% on falling costs of doing business and a tax benefit. In September, the quarterly dividend was increased 50% to $0.30 per share.
Finishing off the round of good news was the company's revenue guidance for the third quarter. InterDigital expects a big jump over last quarter's performance with total revenue coming in between $200 million and $225 million. Management expects the figure to be driven by recurring revenue between $80 million and $85 million and past sales revenue between $120 million and $140 million.
Paired with efforts to curb costs and free up cash flow, the big expected jump in revenue both year-over-year and from the last quarter are the primary reasons the stock has notched big gains in recent months.
InterDigital's plan for the future
The company is in the business of engineering and designing mobile technology solutions and systems. Revenue is generated off of patent royalties and fees from the systems it designs for its various clients. Simply put, developing technology we will use years down the road is the name of the game for InterDigital.
While the company continues to survive off of past accomplishments and continuing work for current technology, designing a 5G mobile network is the big plan for the future. The company is betting on the next-gen network as the future driver of growth for business.
InterDigital cited a recent survey by Telecoms.com Intelligence that indicates the company could be on the right track. According to survey results, 82% of industry professionals polled see the Internet of Things being a major driver behind 5G network deployment, and 86% see rollout by the year 2020 or earlier.
In years past, new mobile network development was centered on increasing speeds and enabling data transfer primarily for consumers. Faster speeds and new network abilities like ultra-high-definition video streaming are still important for 5G developers, but other needs like a network that can handle billions of connected devices, reliability of ultra-sensitive data transmission, and traffic prioritization for machine communications are challenges facing the engineers at InterDigital.
Investors may hope for a massive boom of growth, however, it is worth noting that 68% of those polled also see a slow and gradual rollout of 5G network availability rather than an all-at-once changeover.
Short-term exuberance vs. longer-term trends
With potential revenue from current research and development still a ways off, is InterDigital's recent stock advance sustainable? That will be an area to focus on when the next earnings report comes in. As increasing free cash flow and profits provided the most recent bump in share value, investors should look for signs that expense cuts continue and are sustainable, especially with the big quarterly revenue jump expected.
Developments in 5G network technology will also be important when figuring for future business growth. Keep an ear out for progress and possible new revenue opportunities from 5G this Thursday.
8-12-11 CLOSING HIGH $75.72
7-21-2011 INTRADAY HIGH $82.50
InterDigital Unveils Latest Capabilities at IoT Solutions World Congress
GlobeNewswire•October 25, 2016
Company previews newest features of its IoT platform, oneMPOWER™ powered by wot.io™
WILMINGTON, Del., Oct. 25, 2016 (GLOBE NEWSWIRE) -- InterDigital, Inc. (IDCC), a mobile technology research and development company, today announced that it will showcase the latest capabilities of its IoT platform, oneMPOWER™ powered by wot.io™, at IoT Solutions World Congress from October 25-27, 2016 in Barcelona.
oneMPOWER™ is based on the oneM2M™ standard that defines requirements, architecture, interface specifications, security solutions, and interoperability for IoT technologies. wot.io™ is InterDigital’s flexible IoT integration environment. The latest platform features include lightweight M2M (LWM2M) device management with intuitive user interface, complex event processing, charging enablement, advanced security features, and developer portal for software documentation and evaluation. These advanced features are all key to a comprehensive and flexible IoT application enabling platform.
IoT Solutions World Congress 2016 is the leading global event dedicated to industrial IoT. Organized in partnership with the Industrial Internet Consortium (IIC), IoT Solutions World Congress will focus on IoT for the manufacturing, healthcare, energy and utilities, transportation and logistics, and innovation and technology markets. During the event, InterDigital will demonstrate a number of industrial grade solutions employing oneMPOWER™ powered by wot.io™ integrated with offerings of premier technology providers like HARMAN and Quest Integrated for energy, smart cities, and transportation sectors.
InterDigital is also honored to be selected as a finalist for the IoT Solutions Award in the ‘Best Solution for Transportation & Logistics’ category for the application of its solutions in the oneTRANSPORT initiative. oneTRANSPORT is a pre-procurement commercial deployment involving eleven public and private sector partners in a multi-system transport integration across geographies covering close to 10 million people in the United Kingdom. Dr. Ken Figueredo, IoT Strategy Industry Advisor to InterDigital, will speak about oneTRANSPORT as a test-bed initiative in the IIC's pre-event public forum on Monday, October 24th at 11:50 am. He will expand on deployment successes in an event session titled ‘Intelligent Transport Systems: Implementation Lessons From A Large Scale, Public-Private Sector Trial’ on Thursday, October 27th at 12:45 pm.
Attending IoT Solutions World Congress? Please visit InterDigital at at Booth #C300.
https://finance.yahoo.com/news/interdigital-unveils-latest-capabilities-iot-063000261.html
New 5G Survey: 82% See IoT as Major Driver of 5G
https://finance.yahoo.com/news/5g-survey-82-see-iot-123000982.html
WILMINGTON, Del., Oct. 24, 2016 (GLOBE NEWSWIRE) -- The results of a new survey predict that 5G will hit the market earlier than long expected and highlight the central role that the Internet of Things plays in driving the development of the fifth generation mobile network. The survey of 830 industry professionals revealed that an astounding 82% of respondents identified either consumer or enterprise/industrial IoT as the primary use cases for 5G, and 86% of respondents expect the initial rollout of 5G by or before 2020. Surprisingly, download speed was considered to be among the least important radio characteristics of 5G, with only 12% of respondents deeming it most significant.
The survey report was split into three categories: attitudes towards 5G, expected B2B and B2C services, and challenges around the network and radio requirements of 5G. The common thread among all three categories is that the main driver of 5G is to build a framework for the IoT. The survey was conducted by Telecoms.com Intelligence, the industry analysis arm of Telecoms.com, and co-sponsored by InterDigital (IDCC) and Mitel.
“Increasingly, IoT and 5G are becoming inextricably linked as concepts, largely due to the due to the plethora of identifiable IoT use-cases that will require 5G’s coverage and ability to manage an exponential increase in connected devices,” said Robert DiFazio, Vice President, InterDigital Labs – Future Wireless, InterDigital. “That being said, it will be interesting to see whether unexpected and high-value use cases will emerge to drive 5G, the way video-enabled social networking and the sharing economy did for LTE.”
Other key findings of the report included:
61% of the surveyed industry professionals predicted that IoT connectivity is the aspect of 5G that will have the biggest impact on operator service revenues. 67% also predicted IoT connectivity would have the biggest impact on society.
Spectrum availability is the biggest challenge facing radio access for 5G networks, according to more than a third of respondents.
68% of the responding Telecoms.com audience favor a gradual implementation of 5G that integrates LTE opposed to a “big bang” switchover.
Massive IoT services will be the greatest beneficiary of network slicing. 63% of the industry professionals see the ability to scale bandwidth, latency and traffic prioritization for machine-based communications and data as delivering the greatest benefit.
InterDigital develops wireless technologies for mobile devices, networks, and services. It is a key contributor to global wireless standards, designing and developing a wide range of innovations that are used in digital cellular and wireless products and networks, including IoT, 2G, 3G, 4G and IEEE 802-related products and networks.
The full survey report, titled ‘Road to 5G Outlook 2016,’ is available as a free download here.
About InterDigital®
InterDigital develops mobile technologies that are at the core of devices, networks, and services worldwide. We solve many of the industry's most critical and complex technical challenges, inventing solutions for more efficient broadband networks and a richer multimedia experience years ahead of market deployment. InterDigital has licenses and strategic relationships with many of the world's leading wireless companies. Founded in 1972, InterDigital is listed on NASDAQ and is included in the S&P MidCap 400® index.
InterDigital is a registered trademark of InterDigital, Inc.
THIS IS OUR YEAR! ! !
Cubs are in the World Series !
InterDigital price approaching all time highs ! ! !
Can't get better than that for now.
Wait until next week ! ! !
World Series next!
More IDCC licenses to follow!
GO CUBS ! ! !
GO INTERDIGITAL ! ! !
This is why Intel should be a cash buyout dor IDCC::
NTC 04:00pm EDT Close: $35.51 Change: -2.24 Volume: 75,227,415
http://www.fool.com/investing/2016/10/19/heres-why-intel-corporation-shares-plunged-after-e.aspx?source=yahoo-2-news&utm_campaign=article&utm_medium=feed&utm_source=yahoo-2-news
Here's Why Intel Corporation Shares Plunged After Earnings
A short-term disappointment doesn't alter the fundamental long-term picture.
After microprocessor giant Intel (NASDAQ:INTC) reported its financial results for the third quarter of 2016 and offered a forecast for the fourth quarter, the company's shares dropped more than 5% in after-hours trading.
Although Intel reported strong financial results (revenue for the quarter was better than guided, for example), the drop -- at least in the near term -- appears to be justified. Here's why.
Guidance miss relative to expectations
Intel's revised financial guidance for the quarter called for $15.6 billion in revenue -- representing the midpoint of the range that Intel provided -- thanks to an uptick in sales of chips that go into personal computers. Intel actually delivered $15.8 billion in revenue, handily beating the midpoint of its revised guidance and analyst consensus of $15.58 billion.
So why is the stock taking a drubbing if it actually beat analyst estimates?
The fourth-quarter guidance miss
Analysts were expecting Intel to guide to revenue of around $15.86 billion for the fourth quarter of the year; Intel guided to $15.7 billion -- missing expectations, albeit slightly. Investors often place greater value on future performance and less on past performance, which is probably a large reason the stock is selling off.
However, the problems run a little bit deeper than a headline guidance miss; there was a pretty significant red flag in the company's earnings report -- particularly in its results for its highly important data center group business. (If you're unfamiliar with why this segment is so important to Intel and its investors, read this.)
The data center disappointment
During the first half of the year, Intel's data center business delivered disappointing revenue growth relative to its long-term 15% compounded annual growth rate guidance and even its full-year guidance of low-double-digit percentage growth -- 9% in the first quarter and just 5% in the second quarter.
Despite those lackluster results in the first half of 2016, Intel management insisted that it could still hit its double-digit growth target for the year as a result of a significant reacceleration during the second half of the year. Intel's data center group achieved just 10% year-over-year growth in the third quarter and, unsurprisingly, guided down full-year expectations to just "high-single-digit growth."
Although the better-than-expected results in the company's personal computer chip business helped to bolster the quarterly results -- even the "worse than expected" fourth-quarter guidance still represents a healthy number -- investors are very sensitive to the performance of the company's data center group.
Remember, Intel and many investors have basically written off hopes of ever seeing its PC business as a "growth" business again -- it's a large cash cow that's going to milked for every last dollar of operating profit that it can reasonably produce.
The data center group, on the other hand, represents the company's best hope over the long term at sustainable growth, since the markets it serves are generally growing. If this shows signs of faltering, then Intel's growth prospects may appear dimmer -- leading to a lower share price.
Should investors panic?
Although the headline results might seem bad, things look better when one takes a look under the covers. The bulk of Intel's data center group revenue comes from the sale of processors, and according to the company's 2015 investor meeting, those processor sales can be broken down into three major categories:
Enterprise server.
Cloud server.
High-performance computing, workstations, networking, and storage.
Intel's prior forecast called for each of these segments to represent roughly a third of the processor revenue that its data center group generates in 2016.
According to Intel, although the second two categories performed well -- and they're generally viewed as the healthy and growing sub-segments of Intel's data center business -- the enterprise server portion of its business came in worse than expected. Intel says it was looking for enterprise-related revenue to be roughly flat, but it wound up declining about 3% in the quarter.
The good news here is that the sub-segments that have historically been growing are still growing, so it's not as though these results cast doubt over the long-term trends that this business is expected to benefit from. It just so happens that one generally problematic and disappointing sub-segment was a little more problematic and disappointing than is usually the case.
So although the data center results were disappointing, they're hardly cause to freak out over. If you liked Intel's long-term prospects before the earnings report, then this one "miss" really shouldn't change that fundamental view.