Intel Outlook Called ‘Uninspiring,’ Q1 Out Tuesday – Investor’s Business Daily

Wall Street has low expectations for chipmaker Intel (INTC), which is set to report its first-quarter earnings after the close Tuesday.

Analysts polled by Thomson Reuters expect the Santa Clara, Calif.-based company to earn 37 cents a share, down 8% from the year-earlier quarter, on sales of $12.81 billion, up less than 2%.

For the June quarter, analysts are modeling for Intel to earn 43 cents a share, up 10%, on sales of $12.96 billion, up 1%.

Intel could be helped by improving corporate PC demand and a high likelihood its Grantley server platform could spur traditional IT spending in 2015, Pacific Crest Securities analyst Michael McConnell said in a report Monday. Its growing chip foundry business also could boost results long term, he said.

McConnell expects in-line results and guidance from Intel Tuesday. He rates the stock outperform, with a price target of 31. Intel was up 1.5%, near 26.50, in afternoon trading in the stock market today.

RBC Capital Markets analyst Doug Freedman has a host of concerns about Intel, rating the stock sector perform, with a price target of 26.

“At this point, we consider INTC to be a company in transition as focus of growing into new markets likely proves to be mission critical,” Freedman said.

Intel CEO Brian Krzanich is trying to move the company into hot product categories beyond PCs, including chips for wearable devices, the Internet of Things and cloud computing data centers. Krzanich was promoted to CEO last May.

But Intel’s outlook for 2014 is “uninspiring,” Freedman said.

“The company is unwisely chasing/spending aggressively in new mobile initiatives that are going to be a drag on operating margins in the years to come,” he said. Freedman recommended that Intel embrace competing technology from rival ARM Holdings (ARMH) for its mobile chips.

On March 25, Intel completed its acquisition of Basis Science, a privately held company and the maker of the Basis health tracker band. The purchase gives Intel a play in the emerging wearables market, along with Google (GOOG), Samsung and others.

On March 27 , Intel announced a “significant equity investment” in Cloudera, a provider of enterprise data management service. Intel and Cloudera also agreed to a broad strategic technology and business collaboration.


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