Income · Stocks to Consider and Updates

Intel Posts Strong Sales and Earnings; Raises Dividend and Improves Outlook

Semiconductor industry leader Intel Corp. (NASDAQ: INTC – $49.49) reported strong results for the fourth quarter of last year. Adjusted earnings per share clocked in at $1.08, which was 37% above the previous-year tally of $0.79 and markedly above Street views of $0.87. Sales increased 4%, to $17.1 billion,  due largely to the company’s data center businesses that now account for nearly half of its top line. The company’s Data Center, Internet of Things and Programmable Solutions Groups all registered record sales for the period. While the PC group declined 2% year over year, the Data Center division climbed 21%. Meantime, Intel gave promising news for the March quarter and for  the full-year. Specifically, it looks for revenues of about $15 billion for the March quarter, with share net dialing in at $0.70. For all of 2018, the company looks for revenue of about $65 billion and earnings per share of $3.55, four cents higher than consensus’ estimates.    

       Based on recent growth trends, I believe the company is firmly positioned in the higher-growth segments of the chip market. The company has done a solid job of garnering market share in the fast-growing data-centric segments, relying less on PCs. The company has achieved this through organic growth and via acquisitions, such as its 2015 purchase of programmable logic device maker Altera. I also see room for growth in the autonomous car market, which Intel has a solid position, thanks to its recent purchase of MobileEye. What’s more, the industry giant has the size and finances to improve its presence further in other more-lucrative segments in the years ahead. A likely growing dividend is also a plus for income-oriented accounts and provides support during an industry downturn. Finally, the company, which is working its way out of issues regarding security breaches, said it will increase its quarterly dividend by 10% to $0.30 a share, yielding 2.4% at current levels.

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