Intel Corporation Earnings: Will the PC Really Save the Chipmaker?

Surprising good news from a long-declining sector could boost results this quarter.

Jul 12, 2014 at 3:06PM

On Tuesday, Intel (NASDAQ:INTC) will release its quarterly report, and shareholders have to be excited about the strong performance in the chip giant's stock lately. Even as long-term investors have bemoaned Intel's strategic lapse in falling behind competitors Qualcomm (NASDAQ:QCOM) and NVIDIA (NASDAQ:NVDA) in tapping the full power of the mobile revolution, Intel appears to be getting support from an area that most investors had given hope on entirely: the PC realm.

Intel pioneered the semiconductor industry, with its microprocessors forming the foundation of the PC boom of the 1980s and 1990s. More recently, though, the rise of smartphones, tablets, and other mobile devices has forced Intel to make a major strategic shift, and its sluggishness in adapting to the new environment gave Qualcomm, NVIDIA, and other nimbler competitors the opening they needed to chip away at Intel's dominance. Despite a recent bump in PC demand, Intel still has to figure out how to move forward in a viable strategic direction for the long run. Let's take an early look at what's been happening with Intel over the past quarter and what we're likely to see in its report.

Intc Chip
Source: Intel.

Stats on Intel

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$13.69 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Are Intel earnings exploding higher?
In recent months, investors have become much more enthusiastic about Intel earnings, boosting second-quarter estimates by $0.09 per share and full-year projections by almost double that amount. The stock has soared in response, gaining 17% just since early April.


Source: Intel.

Intel's first-quarter results showed the general trend the chipmaker had fallen into recently. Revenue fell 1.5% from year-ago levels, sending earnings per share down 5%. Pockets of strength helped Intel's overall results, including gains in its data-center group. But steady weakness in its PC business continued to weigh on Intel's overall results, with PC-Client revenue easing downward by 1%.

The big positive surprise for Intel shareholders came in June, when Intel announced it was raising its revenue guidance for the second quarter and for the full year. In the release, Intel cited strong growth in PC systems for enterprise customers, and that was enough for it to expect 5% higher sales for the second quarter and to call for at least some growth for the full year compared to original guidance for roughly unchanged sales. Many believe that the removal of customer support for the older Windows XP operating system might have spurred business customers to replace aging PCs with newer models, leading to the short-term bump in the division.

But many worry that the PC recovery could be short-lived, and when it comes to the area with the most promising long-term prospects for its growth, Intel has continued to struggle in the mobile arena. During the first quarter, Intel suffered operating losses of more than $925 million in its mobile and communications division, with net revenue plunging more than 60% from the year-ago quarter's levels. Despite Intel's predictions that the company would rebound sharply in the mobile space in 2013, many now expect that Intel won't see marked progress in mobile until next year at the earliest, as the first-mover advantages that Qualcomm has continue to hamper Intel's efforts to establish stronger market share.

In the long run, Intel will rely on new chip offerings in order to move forward. Its new Cherry Trail architecture has the potential to move well past older offerings, with applications both for low-power PCs and tablets. That could help its graphics performance be more comparable to offerings from NVIDIA and Qualcomm, finally closing a competitive gap that has held back Intel.

In the Intel earnings report, watch to see how large the bump in PC demand has been and what the company foresees as its long-term impact. Without ongoing progress in its mobile efforts, Intel's earnings outlook won't necessarily stay rosy for long.

Leaked: Apple's next smart device (warning -- it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee that its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are even claiming that its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts that 485 million of these devices will be sold per year. But one small company makes this gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and to see Apple's newest smart gizmo, just click here!

Click here to add Intel to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Dan Caplinger owns shares of Apple. The Motley Fool recommends Apple, Intel, and NVIDIA and owns shares of Intel, Apple, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information