Income · Stocks to Consider and Updates

Intel Posts Healthy Results; Improves Guidance

Chip giant Intel Corp. (NASDAQ: INTC – $36.41) said adjusted share earnings settled in at $0.72 for the second quarter, a 22% increase from the previous-year’s tally. Strength was broad-based, as virtually all the company’s segments performed well. Specifically, the company’s largest segment, the Client Computing Group, reported a 12% year-over-year increase during the period. Management attributes the strong top-line gain to a couple of key factors: Increased notebook volumes and average selling prices helped to shore up results and the ramp-up of the company’s LTE (long-term evolution) semiconductors provided a boost, likely in anticipation of the next iPhone launch. The company’s long-term growth engine – the Datacenter segment – posted a revenue gain of 9% and The Internet of Things division registered a year-to-year increase of some 26%. This arm continues to register strong growth, albeit off a relatively small base. What’s more, the Nonvolatile Memory segment inked a revenue improvement of 58% over last year’s figure, offset by the Programmable Solutions group, which declined 5%.

       Management also gave solid guidance for the September interim and for full-year 2017. The company is forecasting third quarter revenues to be about $15.7 billion and earnings per share for the third period are likely to be $0.80 compared to the Street’s $.076. For the full year, management now looks for revenues of $61.3 billion (vs. analysts’ estimates of $60.2 billion) and adjusted share net of $3.00 vs. $2.67 last year and about ten cents better than consensus.

Intel remains a solid long-term choice for income-oriented investors seeking a technology powerhouse to round out their portfolios. While the company’s bread-and-butter personal computer presence is in the mature stage, the semiconductor titan has made strides in entering faster growing markets. Its intention to purchase Mobileye, which provides chips for driverless cars, along with other bolt-on acquisitions, should enhance the company’s long-term earnings growth initiatives. The shares yield 3.1% at current levels and the well-covered dividend should continue to grow.

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