Semiconductor bellwether Intel Corp. (INTC - Free Intel Stock Report) posted healthy results for the latest June period. Non-GAAP share earnings (excludes items deemed to be nonrecurring in nature), clocked in at $0.72, a 22% increase from the previous-year tally. Strength was broad-based, as virtually all of the company's segments performed admirably for the term. Specifically, the company's largest segment, the Client Computing Group ($8.2 billion in revenues), reported a 12% year-over-year increase during the June quarter. Management attributes the strong top-line gain to a couple of key factors. First, increased notebook volumes and average selling prices helped to shore up results in that segment. Further, the ramp of the company's LTE (long term evolution) semiconductors has provided a boost, likely in anticipation of the next iPhone launch.
Another segment that investors keep an eye on is Datacenter. This unit is highly profitable and is viewed by many as the company's long-term growth engine. Revenues in this segment were up 9% compared to last year, with platform revenue up 8%, and nonplatform revenue (namely non-CPU/chipset technologies) up 12%, year over year. The semiconductor continues to transition from the traditional enterprise-server business, to the cloud service provider and communication service provider units.
Meantime, Intel's other segments generally performed well for the June interim. The Internet of Things division registered a year-to-year increase of some 26%, to $720 million. This arm continues to register strong growth, albeit off a relatively small base (compared to some of its other units). What's more, the Nonvolatile Memory segment inked a revenue increase of $874 million, an improvement of 58% over last year's like period. On the other hand, the Programmable Solutions group posted a 5% decrease at the top line, to $440 million.
Management also gave solid guidance for the September interim and for full-year 2017. On point, September revenues are expected to be $15.7 billion (plus or minus $500 million), which is noticeably higher than our call of just over $15.3 billion. At the bottom line, earnings per share for the third period are likely to be $0.80, a $0.06 improvement over our previous estimate.
For the full year, management now looks for revenues of $61.3 billion and share net of $3.00 on a nonGAAP basis. This compares to our forecast (at the time of our June 30th full-page writing) of $60.16 billion and $2.85, respectively.
As a result of the positive earnings report, we are upping our top- and bottom-line estimates for 2017. We now look for revenues of $61.3 billion and earnings of $3.00 per share. This is in the middle of management's guidance. Our estimates are based on decent economic fundamentals over the balance of this year.
Intel remains a solid long-term choice for investors seeking a technology powerhouse to round out their otherwise diversified portfolios. While the company's bread and butter personal computer presence is in the mature stage, the chip behemoth has made strides in entering faster growing markets. Its intention to purchase Mobileye, which provides chips for driverless cars, could be the shot in the arm the company needs for long-term earnings growth.
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.
