Chip behemoth Intel (INTC – Free Intel Stock Report) has announced strong results for the fourth quarter of 2019. Looking at it with more granularity, non-GAAP earnings per share dialed in at $1.52, which was 18.8% above the previous-year tally, on an 8% revenue increase, to $20.2 billion. Both figures were sharply above our initial expectations. In response to the solid showing, INTC shares headed moderately higher in pre-market trading.
The much-watched data-centric businesses led the way with Data Center Group comparisons climbing 19% on a year-over-year basis. This segment was helped by robust demand from cloud service provider customers and a continued healthy mix of high-performance 2nd-Generation Intel Xeon Scalable processors. What's more, the Internet of Things Group rose 13%, thanks to strength in retail and transportation. Mobileye was the belle of the ball during the December quarter, with sales up 31%, to $240 million. Though this segment is one of the company's smaller ones at present, it offers enormous growth potential, given the prospects for the autonomous car market. The increasing adoption of ADAS (Advanced Driver Assistance Systems) augurs well for growth going forward. In aggregate, the Data-Centric businesses posted a 15% advance from the previous year's figure, despite a sharp 17% decrease at PSG (Programmable Solutions Group). The PC-Centric business chipped in with a 2% year-over-year gain.
Management issued solid guidance for both the first quarter and all of 2020. Specifically, March-period revenue is likely to be $19.0 billion or so, with non-GAAP earnings per share of $1.30. Both figures represent impressive improvement over 2019's like period. For the full year, the top and bottom lines are anticipated to dial in at about $73.5 billion and $5.00 a share, respectively.
We continue to recommend INTC shares for conservative accounts seeking a technology holding to round out their otherwise diversified portfolios. The Data-Centric and PC-Centric businesses each currently account for roughly 50% of the aggregate top line. We look for this ratio to tilt in favor of Data-Centric over the longer run. These segments consist of high-flying groups, such as the Internet of Things and Mobileye, and should help propel margins higher over time. Furthermore, the board of directors boosted the dividend to an annual run rate of $1.32 per share, adding to the stock's appeal as a 3- to 5-year holding.
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.
– Alan House
