Income · Stocks to Consider and Updates

Intel Reports Higher Profits; Raises Guidance

Chip behemoth Intel Corp. (NASDAQ: INTC – $51.79) reported fairly strong results during the June interim. Adjusted earnings dialed in at $1.06 vs. $1.04 last year and seventeen cents better than estimates. Although sales fell 2.7% on a year-over-year basis, to $16.5 billion, this figure came in markedly above the $15.6 billion consensus, which was roughly in line with management’s guidance. Intel also announced an agreement for Apple to acquire the majority of its smartphone modem business for $1 billion. By business segments:

  • The PC-centric business advanced 1% on a year-over-year basis, reflecting a strong mix of Intel’s higher performance products, strength in the commercial segment and consumers purchasing products ahead of possible tariff impacts. Also, Intel’s new 10 nanometer 10th Gen core processors (code-named Ice Lake) are now shipping and are expected to be in volume systems on retail shelves for the 2019 holiday season.
  • The highly monitored data-centric businesses declined 7% relative to last year. In the Data Center Group, the communications service provider segment climbed 3%, while the cloud segment decreased 1%.
  • Enterprise and government sales fell sharply (-31%).
  • The Internet of Things Group achieved record sales, up 12%, on broad-based strength and elevated demand for higher performance processors.
  • Mobileye, which provides silicon for autonomous cars, registered sales of $201 million, a 16% advance, as strong customer momentum continued.
  • Intel’s memory business was down 13% in a challenging pricing environment, while the Programmable Solutions Group declined 5%.

       The chip maker’s 2019 guidance was also above full-year Wall Street expectations. Management forecast 2019 sales of $69.5 billion and adjusted earnings per share of $4.40, versus the average analyst estimates of $68.5 billion and $4.23, respectively. With headwinds such as slowing growth across some parts of the globe and trade tensions between the U.S. and other countries, Intel made it through the period in pretty good shape. The outlook for the remainder of the year appears promising, as well, assuming the global economy roughly keeps on its recent trajectory. The shares yield 2.4%.

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