Back to top

Image: Bigstock

Intel (INTC) to Report Q1 Earnings: What's in the Offing?

Read MoreHide Full Article

Intel (INTC - Free Report) is scheduled to report first-quarter 2020 results on Apr 23.

The company expects first-quarter 2020 revenues of $19 billion. The Zacks Consensus Estimate for revenues is pegged at $18.75 billion, indicating an improvement of 16.8% from the year-ago quarter.

For the first quarter, Intel anticipates non-GAAP earnings to be $1.30 per share. The Zacks Consensus Estimate for earnings, which is pegged at $1.28, has declined 1.5% in the past 30 days. This suggests growth of 43.8% from the prior year reported figure.

Notably, the company has a trailing four-quarter positive earnings surprise of 14.63%, on average.

Factors to Consider

Intel’s first-quarter performance is expected to have benefited from strength in its data center business, on account of growing adoption of cloud-based solutions amid the coronavirus crisis-induced work-from-home wave.

The segment has been gaining from robust adoption of Xeon processors, which are integrated with Optane DC Persistent Memory solution. Notably, Intel’s Optane DC Persistent Memory modules are being leveraged by the likes of Oracle (ORCL - Free Report) , SAP, Google, Microsoft (MSFT - Free Report) , Baidu and Alibaba.
 

Intel Corporation Price and EPS Surprise

Intel Corporation Price and EPS Surprise

Intel Corporation price-eps-surprise | Intel Corporation Quote

Further, the chipmaker’s focus on enhancing field programmable gate array (FPGA) for acceleration and memory to reduce latency and increase speeds is likely to get reflected in its first-quarter results. Additionally, the company’s non-volatile memory business is likely to have benefited from momentum in Optane modules.

Talking about IoT businesses, Mobileye’s new design wins and increasing proliferation of IoT are anticipated to have contributed to Intel’s first-quarter performance.

Notably, coronavirus-induced work-from-home wave is likely to have bolstered sales of processors utilized in enterprise laptops and data center servers, which in turn is expected to have driven the first quarter performance.

Incremental adoption of the latest high-performance processors is likely to have positively impacted the first-quarter performance. Markedly, Microsoft’s latest Surface devices including Surface Pro 7 and Surface Laptop 3 13.5” variant leverage Intel’s new 10th gen Core processor. Moreover, new design wins for its first 10-nanometer (nm) mobile CPU, Ice Lake, is likely to have been a tailwind.

However, deteriorating trend in PC shipments in first quarter, is likely to have affected Client Computing Group (or CCG) segment revenues. Per Gartner’s preliminary data, PC shipments in first-quarter 2020, declined 12.3% year over year to 51.6 million units.

Further, growing clout of Advanced Micro Devices’ (AMD - Free Report) second generation of its EPYC server processors is likely to have created pricing pressure and limited margin expansion. Moreover, in the data-center storage market, the company faces stiff competition from Micron and Western Digital, which is anticipated to have impacted profitability in the first quarter.

Key Developments in Q1

During the quarter, Intel unveiled co-packaged optics on an Ethernet switch, comprising 1.6 Tbps silicon photonics engine integrated with 12.8 Tbps programmable Ethernet switch. The co-packaged solution is aimed at enabling hyperscale data centers to meet demand for limitless bandwidth in a power- and cost-efficient manner.

The chipmaker also rolled out Atom P5900, a system-on-a-chip (SoC), based on 10 nm technology, for wireless base stations aimed at accelerated deployment of 5G networks.

Markedly, on Mar 24, Intel filed 8K with the SEC, announcing that it is suspending stock repurchases temporarily on account of the COVID-19 crisis. However, the company will continue its dividend payment plans. Notably, in October 2019, Intel had announced plans to repurchase shares worth $20 billion over the next 15-18 months. The company noted that prior to the stock buyback suspension announcement; it has repurchased shares worth $7.6 billion in fourth-quarter 2019 and first-quarter 2020.

Zacks Rank

Currently, Intel carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>

Published in