Intel Earnings Preview: Negligible to Slow Growt

Intel reports QE June 2012 financial results on Tuesday, July 17, after market close

Intel has encountered a tough struggle to transition, to “refresh” its product line. The Microsoft desktop days are waning, just as the IBM mainframe days did before that. Intel and Microsoft ruled as kings of the desktop processing architecture. The world is going mobile and Intel is scrambling to regain the leading edge. Look at the charts below, the story, and draw your own conclusions.

Last quarter, GAAP EPS fell to a 6-quarter low, revenues a 4-quarter low, and net income a 7-quarter low. This hardly inspires confidence, even though Q1 is typically weak in the annual cycle, with an upwards bounce in Q2. In fact, every major metric dropped in Q1. Is the drop cyclical or more fundamental?

CEO Paul Otellini promised better days ahead, “In the second quarter we’ll see the first Intel-based smartphones in the market, ship products based on 22nm tri-gate technology in high volume, and accelerate the ramp of our best server product ever, providing a tremendous foundation for growth in 2012 and beyond”. That left CFO Stacy Smith to do the explaining, “Similar to the fourth quarter our business was negatively impacted by hard drive shortages and the resulting additional reduction of inventories across the supply chain”.

I’m not excluding Intel from the future, their vast resources are aimed squarely ahead. They are launching into the mobile market plus expect more penetration into data centers. Q2 2012 guidance is $13.6 billion, plus or minus $500 million. That would be among the best revenues on record and a rebound QoQ and YoY. So, according to Intel, the bottom is in.

For the current Q2 2012, the average analysts’ EPS estimate is $0.53, which is a flat 0.00% QoQ and a slight dip -2% YoY. Intel will probably surprise slightly to the upside. An increase YoY is really necessary to maintain investor confidence. By year-end 2012, CEO Otellini needs to convince us the transition is for real.

Estimated QE June 2012 Earnings per Share (GAAP)
Yahoo Finance Estimates: $0.53 avg, $0.50 low, $0.56 high, 44 analysts
Prior Quarter: $0.53
Prior Year: $0.54
Outlook: none provided

Estimated QE June 2012 Total Revenues (GAAP)
Yahoo Finance Estimates: $13.60B avg, $13.30B low, $13.88B high, 44 analysts
Prior Quarter: $12.91B
Prior Year: $13.03B
Outlook: $13.6B +- $ 500M

Prior Quarter: Intel Net Income Falls to 7-Quarter Low, Forecasts Rebound

Intel Net Income Falls to 7-Quarter Low, Forecasts Rebound

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