Intel Earnings: What To Watch
Intel Corp. is scheduled to announce its second-quarter earnings after the market closes on Wednesday. Here’s what you need to know ahead of the chip maker’s results:
- EARNINGS FORECAST: Intel is expected to report per-share earnings of 50 cents, according to analysts polled by Thomson Reuters, compared with 55 cents a year earlier.
- REVENUE FORECAST: For the second quarter, the semiconductor giant had projected revenue of $13.2 billion, plus or minus $500 million. Analysts expect revenue of $13.04 billion, compared with $13.8 billion in the year-earlier period.
WHAT TO WATCH
- PC DEMAND: Santa Clara, Calif.-based Intel has been hurt in recent years as a shift to mobile devices such as smartphones and tablets has eroded demand for chips used in personal computers. Recent signs of a weakening PC market included the recent warning from rival chip maker Advanced Micro Devices Inc. that its second-quarter revenue fell more than anticipated. Signs also have been emerging of potential weakness in the data-center sector, including recent sales guidance cuts from QLogic Corp. and Seagate Technology PLC.
- OUTLOOK FOR YEAR: Investors also will be watching for Intel’s guidance for the third-quarter and whether its full-year outlook will change. Pacific Crest on Monday reiterated that discussions with the PC supply chain “indicate a sub-seasonal outlook” for third-quarter demand despite the looming releases of Windows 10 and Intel’s Skylake family of processors. Intel in April forecasted that its 2015 revenue would be flat with the $55.9 billion posted for 2014.
- INTERNAL CHANGES: Intel has been reorganizing its business and shaking up its management as Chief Executive Brian Krzanich pushes the chip maker to move more quickly. President Renee James said she would leave Intel at the end of the year as she seeks a CEO job elsewhere. In April, Intel also said it would reduce its spending in 2015 by $300 million, but didn’t publicly quantify the resulting job cuts.
- STRONG U.S. DOLLAR: Intel sells its chips to customers in U.S. dollars, but many PC makers that buy those chips sell their products in local currencies. The PC makers also may have to convert local currencies to buy components, a process that has grown more costly as the U.S. dollar’s value has risen. Such pricing pressures are seen weighing on Intel’s sales growth.