Intel Gets Cold Shoulder on Good Earnings as the Market Flush Takes Place

Intel reported earnings of $0.66 per share and $14.55 billion in revenues, against Thomson Reuters consensus estimates of $0.65 per share on $14.45 billion in revenues. This compared to the previous year’s third-quarter earnings of $0.58 per share and $13.48 billion in revenues. Gross margin also came in at 65%.

Intel also offered guidance for the fourth quarter in the range of $14.2 billion to $15.2 billion. Thomson Reuters has a consensus estimate for the fourth quarter revenue of $14.49 billion. Intel expects the gross margin percentage to be in the range of 62% to 66%. The company also expects a tax rate of approximately 28%.

What we have seen in 2014 is the world of PCs did not die. It even faced a resurgence in spending after Microsoft stopped supporting Windows XP. This drove new PC spending as newer operating systems at the enterprise level needed more powerful processors and memory.

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Multiple analysts weighed in on Intel’s earnings Wednesday morning:

• Merrill Lynch reiterated a Buy rating for Intel with a price target of $43.
• Morgan Stanley downgraded Intel’s rating to Underweight from Equal Weight.
• Sterne Agee maintained a Neutral rating but raised its price target to $31 from $30. The firm also raised earnings estimates.
• Credit Suisse has an Outperform rating on Intel with a target price of $40. The firm raised earnings estimates for the 2014 and 2015 calendar years.

The 200-day moving average is still well below the current share price, all the way down at $28.74. In late September, the share price crossed under the 50-day moving average, which now reads at $34.19.

The broad markets closed mixed Tuesday after all being initially up earlier in the day — after three days of very strong selling pressure — and Intel’s stock price rose about 2.1% on the day to close at $32.14.

Shares were indicated up in the after-hours around 0.5%. However, the initial reaction in the after-hours had shares up over 2%. In Wednesday’s premarket trading, shares were indicated down 1.1% to $31.78, but that was before the economic readings really played a role in the selling.

Shortly after the open, Intel shares were down 5% at $30.51 — and the DJIA was down 360 and the S&P 500 was down 39 points!

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