Earnings Preview: Can Intel Shine In spite of Weakening PC Demand?
By:NewsyStocks   Tuesday, January 17, 2022 4:26 PM



Chip-maker Intel is scheduled to release its fourth quarter earnings for fiscal year 2011 on Thursday, January 19, 2012. Intel continues to face pressure from weakening demand in its consumer business but improvements in the enterprise segment could help boost the company's performance this quarter.

Third Quarter Performance & Earnings History

Intel reported third quarter earnings of $0.69 per share, beating Street estimates. The company also posted record quarterly revenue of $14.2 billion helped along by a healthy growth in its PC Client Group segment. Intel's chief attributed strong notebook and laptop sales to Intel's strong third quarter performance.

Intel has managed to beat analyst expectations in the last 4 quarters and has managed to post record breaking revenue along with double digit profit growth for 6 consecutive quarters.  

Expectations

The company is expected to post earnings in the range of 58 cents and 70 cents per share, with a consensus estimate of 62 cents per share. Revenue for the quarter is estimated to come in between $13.5 billion and $14 billion, with a mean estimate of $13.7 billion. This indicates a top line decline of 4 percent and would also miss the company's guidance of $14.2 billion to $15.2 billion in the last quarter of FY 2011.

Opportunities

Given the vulnerabilities that Intel faces in the PC market, it expects mobile and cloud computing to play a bigger part in the company's strategy going forward. The company plans to unveil a range of Ultrabooks – highly portable and capable laptops to help offset some of the weakness it faces in the consumer segment. Another segment that the company aims to capitalize on is the tablet market which is currently dominated by ARM.

Demand from enterprise clients for data center and cloud computing products are also anticipated to grow in 2012 along with revenue from emerging economies. This should help back up the company's performance in case the established PC segment erodes further.

Punch Line

Flooding in Thailand has landed a blow to the PC industry and has forced Intel to revise their revenue estimate downwards by $1 billion. This may be a cause for concern but considering the company's manufacturing efficiencies which ensure sustainable margins gives it an edge over competitors.

Intel is likely to offer modest results for its PC unit, which is likely to grow at the rate of 2 percent on year over year basis. The company's desktop business is also expected to remain flat. The company product mix is likely to remain PC Client group centric. The company's stock is currently trading at $25.14 and has an average target price of $29.00. Investors can expect a sharper increase if the company manages to replicate its third quarter performance. Intel's market leading position among semiconductor manufacturers' is a promising sign for investors.


 

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