Income · Stocks to Consider and Updates

Intel Delivers Strong Results; Improves Outlook

Chip giant Intel Corp. (NASDAQ: INTC – $56.15) reported strong results for the third quarter as sales came in at just under $19.2 billion, which was a shade higher than the previous year tally, but sharply above Street estimates of $18 billion. Adjusted earnings totaled $1.42 a share compared to $1.40 last year and markedly above the $1.24 analyst expectations. By segments, the PC-Centric business declined 5% on a year-to-year basis, which isn’t really a cause for concern, as this unit is mature and isn’t a primary area for growth. The Data-Centric businesses climbed 6% relative to last year’s comparable period tally. Mobileye delivered a strong performance, with a 20% increase in sales, to $229 million. Though the top-line advance was from a relatively small base, it was still a positive sign. This is one of the key areas for long-term growth, reflecting the promising prospects for autonomous cars in the years ahead. Another interesting segment under the Datacenter umbrella is the Internet of Things – a way to connect ordinary devices to one another through computers. Comparisons in this division from last year were up 9% and crossed the $1 billion threshold. Furthermore, the Network Services Group (memory) posted a record quarter, with sales up 19% to $1.3 billion.

       Management gave strong guidance for both the fourth quarter and full-year 2019. It now looks for December period sales to be $19.2 billion, plus or minus $300 million, while the top line for this year is likely to hit the $71 billion mark. Both figures are well higher than respective Street expectations of $18.8 billion and roughly $69.4 billion. Guidance for share earnings is also brighter. Management now sees fourth quarter earnings per share of $1.24, with the full year to settle at about of $4.60. These figures are also above our previous estimates of $1.21 and $4.40, respectively.

       Despite the issue’s 7½% run-up following the earnings announcement, I still believe this blue-chip stock has appeal for conservative income investors seeking a technology holding to round out their portfolios. Intel is a well-oiled machine and has the financial wherewithal to outpace the competition in all types of markets. The 2.4% dividend yield sweetens the pie.


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