Despite Beating Estimates, Are Intel's Earnings Enough?

Intel logo
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Intel Corp. (NASDAQ: INTC) reported its third quarter financial results after the markets closed on Tuesday. The chip giant had $0.64 in earnings per share (EPS) on $14.5 billion in revenue compared to Thomson Reuters consensus estimates that call for $0.59 in EPS on $14.22 billion in revenue. The same period from the previous year had $0.66 in EPS on $14.55 billion in revenue.

The company gave fourth-quarter guidance of $14.8 billion in revenue, give or take $500 million, with an expected gross margin in the area of 62%. There is a consensus estimate of $14.83 billion in revenue for the fourth quarter.

During the quarter, Intel generated approximately $5.7 billion in cash from operations, paid dividends of $1.1 billion, and used $1.0 billion to repurchase 36 million shares of stock.

In the report the company gave a few business highlights as:

  • Client Computing Group revenue of $8.5 billion, up 13% sequentially and down 7% year over year.
  • Data Center Group revenue of $4.1 billion, up 8% sequentially and up 12% year over year.
  • Internet of Things Group revenue of $581 million, up 4% sequentially and up 10% year over year.
  • Software and services operating segments revenue of $556 million, up 4% sequentially and flat year over year.

Intel CEO Brian Krzanich commented on earnings:

We executed well in the third quarter and delivered solid results in a challenging economic environment. The quarter demonstrates Intel innovation in action. Customers are excited about our new 6th Gen Intel Core processor, and we introduced our breakthrough 3D XPoint technology, the industry’s first new memory category in more than two decades.

On the books the company had cash, equivalents, and short term investments totaling $14.2 billion compared to $4.99 billion at the end of December 2014.

Shares of Intel closed Tuesday down 0.5% at $32.04 on its 52-week trading range of $24.87 to $32.48. Following the release of the earnings report, shares traded up 0.4% at $32.16 in the after-hours trading session. The stock has a consensus analyst price target of $33.90.