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Intel Meets on EPS, Misses on Revenue

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Semiconductor producer Intel (INTC - Free Report) , reported earnings after the bell, posting an EPS of $0.39 and revenues of $12.8 billion. The EPS was in-line with the Zacks Consensus Estimate, but revenues were just below expectations of $12.88 billion.  

While Intel met on EPS, the continued decline in revenues is a significant issue for the street.  Moreover, the company changed its full year expectations from single digit growth to approximately flat growth year on year.  This downgrade in expectations coupled with a continued weakness in Component orders, Notebook ODM shipments, Motherboard shipments, and the decline in global PC units has the street concerned about future growth expectations.  

On the positive, CAPEX estimations for the remainder of the year will decline by $1.0 billion to $11.0 billion (from $12.0 billion).  Moreover, Intel decreased its expectations of Gross margins by 1% (to 59% down from prior expectations of 60%).   Finally, the company also downgraded their estimations of R&D plus MG&A expenditures by $200 million.  

In afterhours trading, INTC has declined over 2%, suggesting the street is still very cautious about their potential for growth admits this global decline in semiconductors, and complementary products.  Given the revenues miss (for the second consecutive quarter), and the downgrade of future growth expectations, we should see Intel remain under pressure for the remainder of the year.  

Both Advanced Micro Devices (AMD - Free Report) and Microsoft Corp (MSFT - Free Report) post earnings Thursday July 18 after the closing bell.  

Zacks will post a detailed report on INTC’s earnings tomorrow morning. 

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