Intel Corporation (NASDAQ: INTC) is probably going to set the tone and set the bar of expectations for most large technology stocks this earnings season. Thomson Reuters has estimates for this afternoon of $0.30 EPS and $10.17 billion in revenues. Today’s bias is not just one of consensus, but is technically one of how much these numbers can be exceeded.
More importantly than just the world’s near-monopoly on PC processors, is how this will impact others. Specifically, we’ll be looking into the reaction at Advanced Micro Devices Inc. (NYSE: AMD) and Microsoft Corporation (NASDAQ: MSFT). Then we’ll be looking at the Semiconductor HOLDRs (NYSE: SMH) as Intel is approximately 23.5% of the weighting of that ETF.
The first thing to check, which is usually even more important than looking backwards, is the forward guidance. Thomson Reuters has estimates of $0.34 EPS and $9.35 billion in revenues for the current quarter we are already in. It is unlikely that Intel will offer 2010 guidance yet at this point, but those estimates from Thomson Reuters are $1.51 EPS and $39.16 billion in revenues.
The chart is not really worth addressing today because the stock hit a new 52-week high today of $21.43. The average analyst price target is now $24.50 to $25.00 as well, and the recent calls have tended to be either positive or just less bad. But the bias is for a “beat estimates and raise guidance quarter.”
Options expiration date is tomorrow, so the options expectations will look far different for Intel today than companies reporting next week with a month of time value to them. The current options pricing today is very active with well over 100,000 contracts traded in the JAN2010 CALLS and over 65,000 contracts of the JAN2010 PUTS traded. Based upon mid-day prices, it seems as though options expect a move of only $0.80 or so based upon today’s news. The caveat of course is that if you used the FEB2010 strikes for puts and calls then that figure would look closer to an expected move of up to $1.12 to $1.20 in either direction. Frankly, it might be easy to think that a move of at least that much would be easy to see.
Intel is up over 2% at $21.45 today, and that is a 52-week high. The highs in mid-2008 were $24 to $25+ and the highs were just above $27.00 in 2007.
We’ll be keeping an eye out more on how this impacts the overall sector and above mentioned stocks more than just by how much Intel beats estimates. We’d also be looking at Applied Materials Inc. (NASDAQ: AMAT) for capital expenditure comment reactions.
JON C. OGG
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