Investors Not Satisfied Despite Decent Earnings From Intel

Technology

Published: July 20, 2016 5:09 pm

Last Updated: January 13, 2020 5:30 am

Intel Corp. (NASDAQ: INTC) reported second-quarter financial results after the markets closed on Wednesday. This company is far and away a leader in the tech sector. Investors did not initially have a favorable reaction to these earnings despite being more or less in line.

The company said that it had $0.59 in earnings per share (EPS) on $13.5 billion in revenue. There were consensus estimates from Thomson Reuters that called for $0.53 in EPS on $13.54 billion in revenue. The same period from last year had $0.55 in EPS on $13.2 billion in revenue.

In terms of guidance for the third quarter, the company expects to have a gross margin of 62% on revenues of $14.9 billion, versus consensus estimates that call for $0.64 in EPS on $14.63 billion in revenue.

Intel detailed its business segment revenues as:

Client Computing Group revenue of $7.3 billion, down 3% sequentially and down 3% from last year.
Data Center Group revenue of $4.0 billion, up 1% sequentially and up 5% from last year.
Internet of Things Group revenue of $572 million, down 12% sequentially and up 2% from last year.
Non-Volatile Memory Solutions Group revenue of $554 million, down 1% sequentially and down 20% year-over-year.
Intel Security Group revenue of $537 million, flat sequentially and up 10% from last year.
Programmable Solutions Group revenue of $465 million, up 30% sequentially. Note the comparable period did not include $99 million of revenue as a result of acquisition-related adjustments.

Brian Krzanich, Intel CEO, commented:

Second-quarter revenue matched our outlook and profitability was better than we expected. In addition, our restructuring initiative to accelerate Intel’s transformation is solidly on-track. We’re gaining momentum heading into the second half. While we remain cautious on the PC market, we’re forecasting growth in 2016 built on strength in data center, the Internet of Things and programmable solutions.

On the books, cash, cash equivalents, and short-term investments totaled $8.2 billion at the end of the quarter, versus $18.0 billion at the end of 2015.

Shares of Intel closed Wednesday at $35.69, with a consensus analyst price target of $36.22 and a 52-week trading range of $24.87 to $35.93. Following the release of the earnings report the stock was down 2.8% at $34.70 in the after-hours trading session.