Income · Stocks to Consider and Updates

Intel Tops 2nd Quarter Earnings Estimates

  INTC  Chip giant Intel Corp. (NASDAQ: INTC – $30.00) reported revenue for the three months ended in June fell 4.6% to $13.2 billion, but on target with Street estimates. Intel earned $0.55 a share in the latest quarter, matching the prior-year figure while surpassing analysts’ forecasts by $0.04. Performance across Intel’s various business segments remained mixed in the period with revenues at the Client Computing Group (57% of the companywide total) edged up 2% sequentially, but dropped 14% from the similar period of 2014. On a more-positive note, the Data Center unit (30% of the top line) fared better, with revenues up 5% and 10%, respectively, on a sequential and year-over-year basis. Elsewhere, the Internet of Things segment (5% of revenues) reported a 4% increase from the year earlier, while the Software and Services business (4% of the total) suffered a 3% decline. On the whole, the gross margin narrowed by 200 basis points in the June period, to 62.5%, though the measure was modestly above company expectations. Looking ahead, management set guidance for the third quarter and the full year that was essentially on par with Street views. The company anticipates revenues of approximately $14.3 billion in the September term and expects the top line to retreat about 1% for all of 2015 to about $55.35 billion. The company didn’t provide bottom-line guidance for the remainder of the year, but I foresee share net of $0.58 and $2.15, respectively, for the third quarter and all of 2015. For next year, the Street is anticipating Intel can earn $2.36 per share.

On June 1st, Intel announced a definitive agreement to acquire computer device manufacturer Altera Corp. for a value of $16.7 billion, which should be a plus for the company in the years ahead. Intel’s bread-and-butter microprocessor business is highly cyclical and mature, and moving into higher-growth areas, such as mobile and data center, ought to give the company’s long-term prospects a much-needed shot in the arm. The stock is down some 20% from its 12-month high, but good-quality Intel shares have above-average total return potential to the end of this decade with a dividend yield of 3.24%. Conservative income accounts looking to add a technology holding to their portfolios would do well to consider Intel stock for the long pull.





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