Intel (NASDAQ:INTC) is scheduled to report its quarterly earnings results on July 15. The company's share price has tumbled over the past month, as there have been a number of data points to suggest that the PC market -- to which Intel is highly levered -- may be faring worse than the company had expected.
On July 15, Intel will not only tell us how it did during its second quarter, but it will also give us insight into what investors should expect from the balance of the year. Here are three things that I believe investors should pay close attention to when the company releases its results and hosts a conference call to discuss said results.
State of the PC market
The first thing investors will want an update on is the state of the PC market. Intel had initially expected PC sales in 2015 to be flat to 2014 levels, but then revised its estimates to down by mid-single digits. An analyst with RBC recently predicted that PC unit shipments will slip by 8% this year, constituting a high-single-digit decline.
Although a quarterly earnings call isn't the appropriate venue to go into detail on the company's long-term expectations and strategy with respect to the PC market, I am going to be listening intently for any further details on Intel's long-term strategy here.
In particular, Intel said in late 2013 that it planned to slash PC-related spending by 5% in 2014. I would be very interested to know if Intel plans to implement further cuts to try to keep PC operating margins relatively high as it invests in new areas.
More precision in the data center
During Intel's investor meeting presentation last year, company executives said it expected its data-center group to grow sales in excess of 15% with operating profit moving up at an even quicker pace. In the first quarter of 2015, this business unit grew by 19.2%.
With the second quarter now behind the company, it will be interesting to see if Intel provides more precise guidance for the revenue and operating profit growth for this division this year. I think investors would have plenty to be excited about if this division is expected to grow between 17% and 19% for the year, while something on the order of 15%-16% would be solid, but not quite an upside "surprise."
Mobile progress -- still on track for an $800 million loss reduction?
Although Intel no longer breaks out the results of its Mobile and Communications group, management has said it plans to reduce its losses in this division by $800 million during 2015. I expect an update on Intel's progress toward achieving that goal during the earnings call.
Although Intel seems to be shipping the 3G variants of its integrated applications processor and cellular baseband, a recent report from DigiTimes claims that the company's LTE parts have been pushed out to early 2016.
If this winds up being the case, then will Intel be able to hit its loss-reduction target for the year in the mobile market?
I hope that during the call, Intel can update investors on its mobile processor ramp plans for the remainder of the year and whether there is any change to the mobile-related financial guidance that it has given for the year.