Intel (Nasdaq: INTC) shares are trading higher Tuesday ahead of
the company's first-quarter earnings report, expected out after the
market close. Shares last traded at $19.84, up 1.1 percent from
Monday's closing price.
Intel is expected to report EPS of $0.46 on revenue of $11.60
billion. Last quarter, the Santa Clara, CA-based tech giant had EPS
of $0.59 on revs of $11.5 billion. The company issued EPS of $0.43
and revs of $10.3 billion for the first quarter of 2010, beating
the Street view of $0.38 and $9.8 billion.
Shares fell 2.4 percent during the quarter and are down 2.2 percent
Intel currently trades at a forward P/E of 9.1x FY12 EPS estimates,
compared to 6.9x for HP (
), 14.1x for Oracle (Nasdaq: ORCL), and 9x for Microsoft (Nasdaq:
Data from Bloomberg has 33 analysts with a Buy on Intel, 17 with a
Hold, and three suggesting to Sell. The analyst price target
average is $25, with a high of $31.50 and low of $19. Shares have
traded in a range of $24.25 - $17.60 over the last 52-weeks.
In January, Intel
cut its first-quarter sales outlook
by $300 million, stemming from a chipset design error with its
forthcoming Sandy Bridge line of second-generation Core processors.
Intel now sees sales of $11.7 billion +/- $400 million.
- Goldman Sachs is bearish on Intel into earnings, expecting
results to come in below Street expectations. Goldman is looking
for EPS of $0.49 and revs of $11.539 billion.
Goldman also sees Intel guiding its second quarter below the
Street. "Intel's quarter will be impacted by several M&A
accounting charges, given that it closed the purchase of
Infineon's Wireless Solutions segment on January 31 for
approximately $1.4 billion, and McAfee on February 28 for about
$7.7 bn. Intel noted that its amortization of intangible assets
from the McAfee acquisition will be about $450 mn in 2011, and
continue thereafter for several years. In addition, it expects to
write-off about $300 mn of McAfee's deferred revenues in 2011,
and $100 mn in 2012. Finally, Intel expects additional inventory
adjustments and amortization of intangibles related to Infineon
WLS. Intel noted in an 8-K last week that it will break out these
charges, and we plan to exclude them from our operating EPS
- JPMorgan is echoing Goldman, also expecting a miss out of
Intel. JPMorgan expects EPS of $0.39. The firm said ODM notebook
shipments in March surprised them to the upside. increasing 61
percent on sequential basis.
"Although we are encouraged by higher than expected notebook ODM
shipments in March, we believe it is insufficient to offset
sub-seasonal growth in January and February given Intel and the
PC food chain expected above seasonal growth in 1Q11...We believe
Intel needs to lower utilization rates and inventory (Phase 2 of
the downturn), as its inventory reached 94 days in 4Q10, 16 days
above the long term average of 78 days, and the second-highest
level in fifteen years. We believe Intel is too optimistic in
assuming: its new processor will drive higher PC demand, PC units
will grow 13%-15% in 2011 without tablets, and netbooks will grow
- Kaufman Bros. expects EPS of $0.44 on revenue of $11.494
billion. Kaufman expects a tough quarter from Intel given the
acquisitions of McAfee and Infineon's Wireless business, as well
as a tough PC market.
"On the server side, our checks indicate that this segment
performed a bit better than normal seasonally. Netting this out,
we arrive at our revenue number of $11.49B vs. Street at $11.61B,
which represents essentially flat revenue growth Q/Q. In terms of
1Q11 gross margins and EPS, we are modeling gross margins in line
with guidance at 61% (a decline of about 700bps Q/Q) given weaker
margins from PC pricing offset by better mix of higher margin
Server products. Netting this out we arrive at our 1Q11 EPS
estimate of $0.44 vs. the Street at $0.46."
- Miller Tabak + Co. is looking for EPS of $0.49. "Recent data
from notebook ODM's in Taiwan point to a much weaker than
expected March quarter...data from Taiwan for February was
particularly weak and makes us worried about the heath of the
quarter for Intel. February has a distortion from Intel's chipset
problems but the weakness appears to extend beyond that issue, in
- Wells Fargo sees EPS of $0.43. Wells believes "Intel was able
to resolve the Sandy Bridge chipset issue about two weeks ahead
of its initial estimates, with first fixed chipsets having begun
shipping in mid-February. Taiwanese PC-related data showed a
sharp rebound in the month of March (e.g. Taiwanese notebook ODM
units up 61% month/month), due in part we think to ramping sales
of Sandy Bridge based desktops and notebooks....Topics of
interest that might be discussed on Intel's earnings call include
the success of Sandy Bridge and the resolution of Intel's chipset
issue, the ramping of Westmere-EX server processors and what is
occurring with Itanium and what Intel is doing in the tablet/Atom
space with Oak Trail, Medfield and Cloverview."
Stay tuned to StreetInsider.com's
section to see our analysis of the highly-anticipated quarterly
results within seconds of the release.