Earnings Preview: Intel Corporation (NASDAQ: INTC) Third Quarter 2010
Thursday, September 23, 2021 12:06 PM

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Intel Corporation (NASDAQ: INTC), the world's largest chipmaker, is scheduled to release third quarter after the closing bell on Tuesday, October, 12, 2010. Analysts, on average, expect the company to report earnings of 50 cents a share on revenue of $11.01 billion. In the year ago quarter, the company reported earnings of 33 cents per share on revenue of $9.39 billion.

Intel Corporation designs, manufactures, and sells integrated circuits for computing and communications industries worldwide. It offers microprocessor products used in desktops, nettops, workstations, servers, embedded products, communications products, notebooks, netbooks, mobile Internet devices, and consumer electronics, as well as in embedded designs, such as industrial equipment, point-of-sale systems, panel PCs, automotive information/entertainment systems, and medical equipment. In the third quarter of 2010, Intel accounted for 80.4 percent of global microprocessor revenue, according to market research firm iSuppli.

In the preceding second quarter, the Santa Clara, California-based company's net income was $2.9 billion, or 51 cents per share, compared to a net loss of $398 million, or 7 cents per share, in the year-earlier quarter. Revenue jumped 34% to $10.77 billion from $8.02 billion.  Analysts, on average, expected the company to report earnings of 43 cents per share on revenue of $10.25 billion. Gross margin for the second quarter increased to 67% from 51% a year ago.

Late in August, the company said that its third-quarter revenue will be below the company's previous outlook. The company now expects third-quarter revenue to be $11.0 billion, plus or minus $200 million, compared to the previous expectation of between $11.2 and $12.0 billion. The chipmaker said that the revenue is being affected by weaker than expected demand for consumer PCs in mature markets. Inventories across the supply chain appear to be in-line with the company's revised expectations. The company's expectation for third-quarter gross margin is now 66 percent, plus or minus a point, lower than the previous expectation of 67 percent, plus or minus a couple of points. However, Intel said that the impact of lower volume is being partially offset by slightly higher average selling prices stemming from solid enterprise demand.

Meanwhile, the Semiconductor Industry Association is sticking with its 2010 forecast of 28.4 percent industry growth. According to the trade group, global sales of semiconductors grew 37 percent year-over-year in July, to $25.2 billion. Sales were up about 1 percent from June's $24.9 billion. "Worldwide sales of semiconductors were strong in July despite growing indications of slower growth in the overall economy," SIA president Brian Toohey said. "The continued proliferation of semiconductors into a broad range of products provides opportunities for industry expansion even in a period of slower overall economic growth," he added.

For Intel, third quarter was a busy one on the acquisition front. In August, the chipmaker agreed to buy the cable modem product line from mobile phone chip maker Texas Instruments Inc. (NYSE: TXN). Also in August, the company announced its intention to acquire security software maker McAfee Inc. and Infineon's Wireless Solutions unit. The latest acquisitions will help Intel to further diversify its revenue streams.

The chipmaker recently unveiled 2nd Generation Core processor product for laptops and personal computers at its annual Developer Forum. The new chips, codenamed Sandy Bridge, will further extend chip performance and battery life, and add a number of visually related features built right into the chips. Th new chips are slated to go into production later this year with new laptops and PCs available starting in early 2011.

Among other developments, Intel reached a settlement with the U.S. Federal Trade Commission to resolve charges that the company illegally stifled competition in the market for computer chips.

In terms of stock performance, Intel shares have lost nearly 10 percent since the beginning of the year. 

Disclosure: Author doesn't own any of the stocks discussed here.



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