INTC Intel Corporation

By Asa Fitch 

Intel Corp. is expected to report fiscal fourth-quarter earnings Thursday after the market closes. The results come as the chip maker tries to resolve supply shortages and protect its dominant market position from growing competition by rival Advanced Micro Devices Inc. Here's what to expect:

EARNINGS FORECAST: Analysts surveyed by FactSet expect Intel to report $1.25 in adjusted earnings per share, down from $1.28 in the same period last year. Intel previously warned it faced some higher costs, as it tries to ramp up production of a new generation of superfast processors.

REVENUE FORECAST: Intel is expected to report $19.23 billion in revenue, up about 3% compared with the year-prior period. Intel has benefited from the growing trend toward cloud computing, where companies rent data storage and processing capacity. The data centers enabling the cloud are big users of advanced chips.

WHAT TO WATCH:

SUPPLY WORRIES: Intel, for months, has struggled to keep up with surprisingly strong demand for chips used in many personal computers. Now investors are looking for signs the company is getting past those inventory challenges. Intel has already said they would weigh on the last quarter's results and issued an unusual public apology. But PC shipments, which rose in the fourth quarter, according to figures from Gartner and International Data Corp., could help compensate for some of those problems. The chips Intel is selling to PC makers come with high margins, Cascend said in a research note.

DATA-CENTER DEMAND: Intel is battling with rival AMD in the hot market for chips that go into data centers. AMD released new server processors last year that bested Intel's in some performance and cost measures. Intel, however, reported 4% year-over-year data-center revenue growth the previous quarter, as cloud-computing giants added hardware. "By all accounts cloud spending should still be strong" in the fourth quarter, Bernstein Research analysts said in a note.

SMALLER TRANSISTORS: Intel has fallen behind chip-making giant Taiwan Semiconductor Manufacturing Co. in the race to make the smallest transistors that power the fastest computers. Intel only recently started to sell cutting-edge 10-nanometer chips, but its production delays helped AMD, which contracts with TSMC to make its chips, to gain market share. In laptops, for example, Intel supplied 95.7% of processors in early 2018, but just 82.5% by late last year, according to Susquehanna Financial Group research. Investors will be scrutinizing Intel's expected 2020 outlook for signs it is getting more 10-nanometer devices into the market.

Write to Asa Fitch at asa.fitch@wsj.com

(END) Dow Jones Newswires

January 23, 2020 05:44 ET (10:44 GMT)

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