Intel (INTC) Q1 Earnings Preview
Key Points:
- INTC is scheduled to release Q1 results today after the market closes with a conference call to follow at 5:00 p.m. ET
- The current Capital IQ Consensus Estimates call for Q1 EPS of $0.41, which would equate to about 7.9% year-over-year growth. Revenues are expected to come in at around $12.82 billion, which would equate to about a 1.2% year-over-year increase over last year's $12.76 billion in revenue
- In terms of guidance:
- On Jan. 15, co issued initial guidance for Q1, expecting Q1 revs in the range of $13.2-14.2 billion with gross margins of 60%, +/- a few %age points
- Also on Jan. 15, co reaffirmed FY15 guidance, sees mid-single digit revenue growth with gross margins of 62%, +/- a couple % points
- On March 12, co lowered Q1 revenues guidance to $12.5-13.1 billion reflecting weaker than expected demand for business desktop PCs and lower than expected inventory levels across the PC supply chain
- On March 5, Northland Capital Markets came out suggesting ALTR would be a good strategic fit for INTC
- This M&A speculation came to a head on March 27 when both ALTR and INTC spike hard on elevated volume surrounding rumors that a deal which INTC would buy ALTR circulated
- It was rumored that ALTR rejected the INTC offer which stood in the "low-$50s"
- Talks haven't closed yet, and there is no sign that a deal won't occur, but as of today the talks have stalled
- INTC reported Q4 (Dec) earnings of $0.74 per share, $0.08 better than the Capital IQ Consensus of $0.66; revenues rose 6.4% year/year to $14.72 bln vs the $14.71 bln consensus.
- PC Client Group revenue of $8.9 bln, down 3% sequentially and up 3% YoY
- Data Center Group revenue of $4.1 bln, up 11% sequentially and up 25% YoY
- IoT Group revenue of $591 mln, up 12% sequentially and up 10% YoY
- Software and services operating segments revenue of $557 million, flat sequentially and down 6% YoY
- On April 14, Topeka Capital Mkts noted preannouncements from INTC and weak technology commentary reflect sluggish PC market demand, and they believe the last few weeks have brought a bottoming of order patterns. Firm believes certain pockets of demand remain relatively healthy including data center.
- On April 13, MKM Partners noted catalysts likely come from better PC fundamentals and dramatic moves to grow new business. Although the ALTR deal may be off the table, INTC can pay premiums for fabless semiconductor companies and generate significant gross margin expansion, in firm's view. Firm assumes many fabless companies have 40% COGS (60% product GMs) and INTC's leading front-end/back-end manufacturing can be done at 40% GMs (note TSMC (TSM, NR, $23.50) in high 40s).
- On March 5, Northland Capital Markets was out suggesting ALTR "would fit" into INTC's data center strategy. The firm noted ALTR would make a good strategic fit for INTC given recent (at the time) semiconductor M&A activity.