Intel Preview, 360-Degree Review (INTC, AMD)

After the close of trading today we will get the second of the 30 DJIA components reporting earnings: Intel Corporation (NASDAQ: INTC).  We wanted to give a full 360-degree review of the stock with expectations around the price move, Thomson Reuters consensus, charts, options, and more added color.  This will likely set the tone for Thursday’s earnings report from the distant #2 rival Advanced Micro Devices Inc. (NYSE: AMD).

Intel Corp. (NASDAQ: INTC) has consensus estimates from Thomson Reuters of $0.43 EPS and $10.25 billion in revenues.  For the next quarter, estimates are $0.48 EPS and $10.92 billion in revenues; for the fiscal year its estimates are $1.87 EPS and $43.03 billion in revenues.

Shares of Intel are up 2% this morning after Alcoa got earnings season off to a solid start, and shares are right at $20.99.  Shares were up around $24.00 in late April before the market slide came but are up from $19.20 just ten days ago.

Options traders seem to be braced for a move of about $0.50 today and the bets in the $20 and $21 PUTS are too close to see any close direction.  A $21.00 straddle costs almost $1.00, which is not too far out of the norm going into earnings.

Intel’s stock chart went over the last week from very negative to short-term positive.  The 200-day moving average was violated two-weeks ago and then it broke back above yesterday and today.  The 50-day moving average is $21.04, right where shares are now.  The intraday high was also $21.03, and it is worth noting that getting close to that 50-day moving average has been a strong resistance level going back to mid-May.  Intel shares are now above the old support levels that per put in before the end of June, so traders may look for that 200-day moving average to hold as support and some will be hoping for or looking for resistance at the 50-day.

Analysts still have a positive bias as a group.  The average target is almost $27.00, implying an upside to the average price target of about 28%.  That average target is north of the 52-week high as the current 52-week trading range is $15.90 to $24.37.

An issue to consider is that recent buildups in DRAM and supposedly in PCs at the retail level have started to come into play.  That has not kept Intel from rallying, but is something to watch.  Is that just in Europe, or have Americans decided to wait until “back to school” season in August?

The move to Droid phones, iPhones, and iPads generally means that it is a processor sale that does not go to Intel.  Intel still dominates the PC markets, and the question will come down to whether the rise of Apple will be one that leaves Intel less and less included.  The answer to that depends upon which Mac models are selling the best.  Servers, PC’s, and mobile PC models of netbooks and notebooks are the other markets where Intel is scoring hugely with close to 80% market share depending upon which segment. The issue we will watch on competitive pressure is that AMD is now the cheapest option for processor costs per unit, PC, mobile PC, and servers).  That begs the question of whether Intel can hold its prices and margins against its market share.

Advanced Micro Devices Inc. (NYSE: AMD) is due after the closing bell on Thursday.  Intel will set the tone if the news is bad, and whether AMD can report anything positive is up to it.  Thomson Reuters has estimates of $0.07 EPS and $1.55 billion in revenues.  For the next quarter, estimates are $0.13 EPS and $1.66 billion in revenues; for the fiscal year its estimates are $0.47 EPS and $6.54 billion in revenues.  Shares are trading up over 2% at $7.53 versus $10.00 at the end of April before the market slide came but the turnaround processor and graphics stock is up from $7.04 just ten days ago.

Alcoa set the bias for earnings season in the base economy, now it will be Intel which gets a chance to set the bias for how earnings season treats the big technology companies.

JON C. OGG