Chip behemoth Intel (INTC - Free Intel Stock Report) reported fairly strong results during the June interim. Looking at it with more granularity, share earnings on a non-GAAP basis (excludes items we deem to be nonrecurring in nature) dialed in at $0.92. While this was below the previous year's $1.04-a-share tally, it was a few cents ahead of our $0.89 estimate. Intel's share price responded favorably following the second-quarter earnings announcement.
Although Intel's sales fell 2.7% on a year-over-year basis, to $16.5 billion, this figure came in markedly above our $15.6 billion estimate, which was roughly in line with management's guidance. The PC-centric business advanced 1% on a year-over-year basis, reflecting a strong mix of Intel's higher performance products, strength in the commercial segment, and consumers purchasing products ahead of possible tariff impacts. Also worth noting, Intel's new 10 nanometer 10th Gen core processors (code-named Ice Lake) are now shipping, and are expected to be in volume systems on retail shelves for the 2019 holiday season.
Meanwhile, the highly monitored data-centric businesses declined 7% relative to last year. In the Data Center Group, the communications service provider segment climbed 3%, while the cloud segment decreased 1%. Also, enterprise and government sales fell sharply (-31%). What's more, the Internet of Things Group achieved record sales, up 12%, on broad-based strength and elevated demand for higher performance processors. Mobileye, which provides silicon for autonomous cars, registered sales of $201 million, a 16% advance, as strong customer momentum continued. Finally, Intel's memory business (Non-Volatile Memory Solutions Group) was down 13% in a challenging pricing environment, while the Programmable Solutions Group declined 5%.
For the third quarter, management gave revenue guidance of about $18 billion, with share earnings clocking in at $1.24 on a non-GAAP basis. The top-line figure is slightly above our estimate from three months ago, while the earnings expectation is a few cents lower than we had forecasted.
Looking at full-year 2019, management believes that sales will dial in at about $69.5 billion, translating to share net of $4.40. Both figures fall shy of 2018 comparisons. This does not come as that much of a surprise to us, given that last year was record-breaking for the company.
Overall, the second-quarter earnings report and outlook for the remainder of the year was quite positive for Intel. With headwinds such as slowing growth across some parts of the globe and trade tensions between the U.S. and other countries, Intel made it through the period in pretty good shape. The outlook for the remainder of the year appears promising, as well, as long as the global economy roughly keeps on its recent trajectory.
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
