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Will Soft Processor Revenues Hurt Intel (INTC) Q4 Earnings?

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Intel Corporation (INTC - Free Report) is scheduled to report fourth-quarter 2022 results after the closing bell on Jan 26. In the fourth quarter, the company is likely to have recorded lower revenues from the Client Computing Group (“CCG”) segment due to challenging macroeconomic conditions and cheaper alternatives available from rival firms.

Factors at Play

CCG is the company’s largest segment and accounts for the lion’s share of total revenues. It includes computer CPUs, several server boards and form factor systems and graphic products. The segment focuses on high-growth businesses, thin-and-light, commercial and gaming, and growing opportunities in areas such as connectivity.

In the to-be-reported quarter, Intel Foundry Services added features to its design ecosystem Accelerator program to enable assured chip design and production on advanced process technologies and meet the stringent design and production requirements of national security applications. However, the segment revenues are likely to have declined as customers continue to reduce inventory owing to a challenging macroeconomic environment, leading to lower shipments.

The company is gradually reducing its dependence on PC-centric business by transitioning into data-centric businesses such as AI and autonomous driving. Moreover, the continued ramp-down from the exit of 5G smartphone modem and Home Gateway Platform businesses is likely to have resulted in lower revenues for the segment. In addition, the prolonged Ukraine-Russia war has hampered the company's operations. All these are likely to have led to top-line contraction and increased pricing pressure.

Overall Expectations

The Zacks Consensus Estimate for revenues from the CCG segment is pegged at $7,354 million, indicating a decline from $10,133 million reported in the year-ago quarter.

The Zacks Consensus Estimate for total revenues of the company stands at pegged at $14,462 million, which indicates a decline from the year-ago quarter’s reported figure of $19,532 million. The consensus estimate for adjusted earnings per share stands at 20 cents, suggesting a sharp fall from $1.09 reported in the prior year.

Earnings Whispers

Our proven model does not predict an earnings beat for Intel this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at 20 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Intel Corporation Price and EPS Surprise

Intel Corporation Price and EPS Surprise

Intel Corporation price-eps-surprise | Intel Corporation Quote

Zacks Rank: Intel currently has a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Apple Inc. (AAPL - Free Report) is set to release quarterly numbers on Feb 2. It has an Earnings ESP of +0.35% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Applied Materials Inc. (AMAT - Free Report) is +0.17% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 15.

The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +6.88% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 1.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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