Intel Expected to Show Profit, Revenue Rise -- Earnings Preview
July 27 2017 - 8:29AM
Dow Jones News
By Ted Greenwald
Intel Corp. is scheduled to announce second-quarter earnings
after the market closes Thursday. Here's what to look for:
EARNINGS FORECAST: For the quarter that ended in June, analysts
expect Intel to report earnings of 68 cents a share on an adjusted
basis, according to a survey by Thomson Reuters, up 15% from 59
cents the same quarter a year earlier. Intel's adjusted earnings
exclude restructuring charges and certain items arising from
acquisitions.
REVENUE FORECAST: Analysts expect total revenue of $14.4 billion
for the quarter, up roughly 6% from $13.5 billion the year-earlier
quarter.
WHAT TO WATCH:
DATA CENTER GROWTH: Not long ago, Intel expected annual revenue
growth in the midteens in the segment that sells chips for the
computers that drive cloud services, network providers, and
corporate operations. But data-center growth slowed to about 6% in
the first quarter as sales to enterprises slowed amid strengthening
competition from rival Nvidia Corp., whose graphics processors are
well suited to emerging artificial intelligence tasks. Boosting
data-center growth is "No. 1, the most important thing," said Srini
Pajjuri, an analyst with Macquarie Capital.
PC COMPETITION: The latest quarter was the first full reporting
period in years in which Intel faced meaningful competition in
personal-computer chips, products that helped drive more than half
of total revenue last year. Advanced Micro Devices Inc. in March
began shipping its Ryzen chips for desktop computers, which were
roughly 40% of the PC market in 2016, according to research firm
Gartner Inc. Although AMD's products haven't had much time to prove
themselves in the market, investors will be looking for perspective
on their impact, according to Tom Sepenzis of Northland Securities
Inc.
NEW MARKETS: Intel is investing heavily in new markets to spur
growth as PC sales flag and data centers diversify, and investors
will be on the lookout for signs that returns are coming, said Matt
Ramsay of Canaccord Genuity Group Inc. Shareholders will watch for
information about sales, profit margins, and competitive
positioning of memory products, a segment the company has said it
expects to become profitable by 2019. They will also want to know
about the competitive position of Mobileye NV, a $15.3 billion
acquisition that hasn't yet closed, relative to rivals pushing
toward fully autonomous vehicles. And they will be looking for
updates on the product road map for Altera Corp., which Intel
purchased in 2015 for $16.7 billion.
Write to Ted Greenwald at Ted.Greenwald@wsj.com
(END) Dow Jones Newswires
July 27, 2017 08:14 ET (12:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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