Intel Finishes Year with Strong Results

INTC  Fourth-quarter adjusted profit at chip maker Intel (NASDAQ: INTC – $37.56) rose as robust sales of chips that drive the computers underpinning large internet providers and corporate operations climbed, while sales of chips for PCs also rose. Profits and revenue beat expectations as the company reported adjusted earnings per share of $0.79 – an increase of about 7% – on revenue of $16.37 billion, a 9.8% increase over last year’s fourth period. Analysts expected an average of $0.74 cents a share in adjusted earnings on $15.75 billion revenue. Revenue from the data center business rose 8.4% to $4.67 billion, while revenue from its traditional PC business rose 4.3% to $9.13 billion. The PC unit also includes sales of chips for mobile phones and tablets.

       Intel has been building its data center, Internet of Things and automotive businesses to reduce dependence on the PC market, which has been roiled by users’ shift to mobile phones for their computing needs.  The Santa Clara, California-based company, which will use New England Patriots quarterback Tom Brady to showcase its 360-degree video technology during the 2017 Super Bowl, is also driving deeper into the automotive market. The company said earlier this month that it would acquire a stake in German digital mapping firm HERE.

       For 2017, the company estimates $2.80 a share in adjusted earnings vs. $2.72 for the year just ended, on flat revenue. Analysts were looking for $2.81 a share in adjusted profit. For the first quarter, the company guided for adjusted earnings of $0.65 a share on revenue of $14.8 billion, above Street views of $0.61 and $14.53 billion, respectively. Total return potential for the pull to 2019-2021 is, in my opinion, enticing on a risk-adjusted basis. The company’s yield of nearly 2.8% is well covered and has grown at a 17% annual clip for the past ten years. Conservative income accounts seeking a bellwether name in the technology sector ought to consider holding for the long-term.

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