Chip behemoth Intel (INTC - Free Intel Stock Report) reported solid results for the March quarter. On point, revenues came in at nearly $14.8 billion, a year-over-year improvement of approximately 8%. Furthermore, share net clocked in at $0.66 on a non-GAAP basis (excludes nonrecurring items), representing an increase of more than 22% from the previous-year period.
However, INTC stock fell moderately in price following the announcement of first-quarter results. We aren't 100% sure why the stock fell. March-period results came in about as expected on the top-line front, while earnings results outpaced consensus estimates. What's more, the June-quarter and full-year guidance was solid, as we will discuss with more granularity in the paragraphs below. We think that much of the good news related to Intel's first-quarter results was already baked into the share price.
Revenue growth was experienced across nearly every segment during the March period, with the Non-Volatile Memory Solutions Group leading the way with a year-to-year advance of 55%. The Programmable Solutions Group chipped in with an 18% gain, versus the last year's comparable period. Moreover, the Internet of Things unit climbed 11%, to $721 million. Further, the Client Computing Group and Data Center Group inked top-line gains of 6% each compared to 2016's March period. The only segment with a decline was the Intel Security Group, which fell a modest 1%, year over year.
In aggregate, higher average selling prices enabled the gross margin to reach 61.8%, equivalent to a 250 basis point advance over the previous-year tally. A higher revenue base also helped shore up profits, as fixed costs were better absorbed.
Company guidance was also pretty good for the June period and the whole of 2017. For the second quarter, revenues are likely to be $14.4 billion, with share earnings of $0.68 after stripping out nonrecurring items. For the full year, revenues are poised to hit the $60 billion mark, likely resulting in earnings per share of $2.85. The gross margin is likely to be 63%, plus or minus a couple of percentage points.
As a result of the recent guidance, we now look for Intel to post revenues of $14.4 billion for the June quarter, a slight increase from our previous $14.37 billion call. Too, earnings per share are likely to be $0.68, a $0.04 increase over our previous estimate.
For the full year, we are leaving our top-line expectation unchanged at $60 billion, while boosting our earnings call by a nickel, to $2.85 a share.
Intel remains a good selection for conservative investors seeking a technology holding to round out their diversified portfolios. The recent 5% increase to the dividend (to $1.09 a share on an annualized basis) also helps to sweeten the pot and provides a level of support for the share price. Too, the company's recent announcement that it wants to make a splash in the driverless car market with the pending acquisition of Mobileye NV is another reason for optimism moving forward. This purchase would further diversify Intel beyond its core (and mature) personal computer businesses.
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.
