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Brian Hamilton

Intel Slightly Misses Earnings

INTC

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Semiconductor producer Intel (INTC - Analyst Report), reported earnings after the bell, posting an EPS of $0.40, missing the Zacks consensus estimate of $0.42.  Moreover, revenues were in line with the consensus numbers at $12.6 billion. 

This earnings release is the first time in 5 quarters that INTC did not have a positive earnings surprise (previous 4 quarters showed an average surprise 9.13% above consensus).  Over the past 30 days, there have been multiple estimate downgrades, showing an overall negative earnings sediment.  Also, analysts are concerned about the companies mobile phone strategy, and the 13.9% year over year decline in PC shipments.    

Another concern is the increase in CAPEX.  In 2012, CAPEX was $11 billion, and 2013 was projected to be $13 billion (CEO Stacy Smith announced, after hours, a revision to 12 billion for the year).  The expenses are designed to invest in core business segments.  

According to Stacy Smith, he believes that INTC is, “well positioned for growth.”  Mr. Smith stated that the transition client category of ultrabooks, convertibles, and android tablets are sources of expected unit growth for the company.  Mr. Smith went on further to state that he is, “OK with top line growth projections, and expects single digit revenue growth for 2013.”  He also pointed out that INTC has recently won 11 phone design competitions, and is the performance leader in third party chips.  

On a positive note, Mr. Smith announced that 40% of their free cash flow has been earmarked for dividends (posting a 4% dividend yield).  Moreover, INTC intends to allocate funds for a stock repurchase.  

In afterhours trading, INTC has declined 0.52%, suggesting that street is still very cautious about future top line, and revenue growth.  Zacks will post a detailed report on INTC’s earnings tomorrow morning. 

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