Intel Sinks Despite Solid Earnings Beat

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Intel Corp. (NASDAQ: INTC) reported third-quarter financial results after markets closed on Tuesday. Overall revenues increased by 9% from last year’s third quarter while net income rose 21%, even guidance was in line. However this was not enough for investors as they sent shares lower in the after-hours session.

The company said that it had $0.80 in earnings per share (EPS) on $15.8 billion in revenue. Thomson Reuters consensus estimates were calling for $0.72 in EPS on $15.58 billion in revenue. The same period in the previous year had $0.66 in EPS on $14.46 billion in revenue.

For its business segments the company reported:

  • Client Computing Group revenue of $8.9 billion, up 21% sequentially and up 5% year over year.
  • Data Center Group revenue of $4.5 billion, up 13% sequentially and up 10% from last year.
  • Internet of Things Group revenue of $689 million, up 20% sequentially and up 19% year over year.
  • Non-Volatile Memory Solutions Group revenue of $649 million, up 17% sequentially and down 1% year over year.
  • Intel Security Group revenue of $537 million, flat sequentially and up 6% from last year.
  • Programmable Solutions Group revenue of $425 million, down 9% sequentially.

In terms of fourth quarter guidance, the company expects to see revenues of $15.7 billion, give or take $500 million. The consensus estimates are calling for $0.76 in EPS on $15.86 billion in revenue for the coming quarter.

During the quarter, the company generated approximately $5.8 billion in cash from operations, paid dividends of $1.2 billion, and used $457 million to repurchase 13 million shares of stock. On the books, cash, cash equivalents, and short-term investments totaled $8.02 billion at the end of the quarter, versus $17.99 billion at the end of 2015.

Brian Krzanich, Intel CEO, commented:

It was an outstanding quarter, and we set a number of new records across the business. In addition to strong financials, we delivered exciting new technologies while continuing to align our people and products to our strategy. We’re executing well, and these results show Intel’s continuing transformation to a company that powers the cloud and billions of smart, connected devices.

Shares of Intel closed Tuesday up 1.2% at $37.75, with a consensus analyst price target of $40.65 and a 52-week trading range of $27.68 to $38.36. Following the release of the earnings report, the stock was initially down 3.7% at $36.35 in the after-hours trading session.