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Semiconductor industry leader Intel (INTC - Free Intel Stock Report) reported credible news for the March quarter. Earnings per share came in at $0.40, which was roughly on par with our expectation (of $0.41), on revenues of $12.58 billion (which was a bit below our $12.69 billion estimate). Intel shares didn't react much either way following the earnings announcement.

Overall, we view Intel's first-quarter results as fairly good news, given the current macroeconomic environment. True, the U.S. economy is on the mend, but gains have been at a measured and uneven pace, and may continue in that vein over the next year or so. What's more, recent industry reports suggest that global PC sales declined 14% in the March quarter, and this market is Intel's bread and butter. Hence, when you factor in these trends, Intel's immense size and savvy management helped it to weather the less-than-sanguine broader factors, in our view.

It should also be noted that the first quarter is the company's seasonally weakest period. That said, although Data Center Group revenues fell 6.9% sequentially, it was up 7.5% relative to last year. Meanwhile, the PC Client Group and Other Intel Architecture unit posted lower revenues on a year-over-year and sequential basis. The companywide gross margin fell 2% relative to the December period, to 56%.

Looking forward, management gave second-quarter revenue guidance of $12.9 billion (give or take $500 million), which was roughly on par with our estimate. The gross margin is likely to be 58%, plus or minus a couple percentage points. The company's full-year sales guidance remains unchanged, at low single-digit growth, year over year, while the gross margin is likely to be in the neighborhood of 60%. However, capital expenditures are now likely to be about $12.0 billion, a $1.0 billion reduction from management's prior view. This will help boost free cash flow for other endeavors.

We have left our top- and bottom-line views unchanged for each of the next two years. We still look for revenues of about $54.0 billion and $56.5 billion in 2013 and 2014, respectively. What's more, share net is still likely to hit $1.95 and $2.10 over the next two years, respectively.

Intel shares haven't performed well compared to the Value Line arithmetic average over the trailing one-, three-, or five-year periods. However, we believe there is hope for a brighter future. Although the personal computer industry is a mature one and growth is likely to be modest at best, we believe that Intel will use its immense size and healthy balance sheet to pursue endeavors in higher growth segments of the chip market. What's more, we believe that production efficiencies, namely the transition to a 14 nanometer manufacturing process, will help to lift profits, as transistors can be produced at a cheaper rate. A more-than 4% dividend yield also helps to sweeten the pot. (It should be noted that few technology companies pay a dividend as they tend to plow cash back into existing operations).

About The Company: Intel Corporation  is a leading manufacturer of integrated circuits. In addition to primarily supplying manufacturers of personal computers, the company serves a multitude of other global markets, including communications, industrial automation, military, and other electronic equipment. Intel’s product line consists of microprocessors, with the Pentium series being the most notable. It also manufactures microcontrollers and memory chips, and the company sells computer modules and boards, and network products.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.