) posted third-quarter revenue of $13.5 billion-an increase of 5%
sequentially and roughly flat, relative to year-ago levels.
Excluding the effects of one-time factors, the company's earnings
per share came in at $0.49. These results were in line with
Bloomberg consensus estimates.
However, some analysts were disappointed that Intel lowered its
fourth-quarter sales guidance to between $13.2 billion and $14.2
billion, which equates to a 2% decline or a 5% increase, relative
to the preceding quarter. Management attributed this slight
downward revision to soft PC demand.
Bearish commentators cite Intel's limited share of the rapidly
growing mobile and tablet markets and the challenges that the firm
faces in stealing business away from
And even if Intel makes inroads into these product categories,
critics caution that the lower average sales prices on processors
used in these mobile devices may fail to offset volumes
cannibalized from the traditional PC market-the source of 62% of
the chipmaker's third-quarter revenue.
These headwinds are real. But investors shouldn't overlook the
strength of Intel's data center group, which posted record revenue
in the third quarter and continues to benefit from the transition
to cloud computing.
In the third quarter, the company grew its cloud-related revenue by
40% from year-ago levels and storage sales by 20%, while revenue in
its high-performance computing segment jumped by 27%.
Meanwhile, management indicated that Intel's data center group
would continue its strong sales momentum in the fourth quarter and
reiterated its full-year guidance for double-digit revenue growth
in this segment.
We also expect the company to benefit from improving enterprise
demand in the US and Western Europe as economic growth strengthens
in these regions. That being said, demand in emerging markets
should remain volatile in the near term.
With Intel making inroads into the tablet and smartphone markets,
and its data center solutions likely to continue their impressive
momentum, the stock continues to rate a buy up to $27.00 per share.
A dividend yield of 3.7% is an added bonus.
Editor's Note: This
article by Elliott Gue was originally syndicated by
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