Chip behemoth Intel (INTC – Free Intel Stock Report) fired on all cylinders during the September interim. Specifically, non-GAAP share earnings (excludes items that are nonrecurring in nature) came in at $1.40, which was markedly higher than the previous year's tally of $1.01 and our $1.13 expectation. Sales during the quarter were slightly south of $19.2 billion, which represented a year-to-year increase of nearly 19%.
Looking at the results with a bit more granularity, the healthy top-line performance was broad-based, with almost all of the company's segments performing nicely. Intel's PC-centric business registered record sales, thanks to performance-leading profits in the gaming and commercial segments.
What's more, the company's data-centric sales jumped 22%, year over year. This is noteworthy as the segment is on the radars of many pundits on Wall Street. Looking at the segment more closely, the record quarterly sales performance was driven by strong demand from cloud and communications service providers that investing to meet the explosive demand for data.
The Internet of Things division also posted record September-period sales. This segment focuses on the method in which computers connect everyday devices to one another. Sales improved 19%, year over year, in this division, thanks to strong business demand.
Intel's Programmable Solutions Group registered a 6% top-line increase from last year, thanks to strength in data center business and healthy organic growth.
Finally, Mobileye, the company's “foot in the door” to the potentially very lucrative autonomous car industry inked record quarterly sales of $191 million, a 50% year-over-year gain. The unit added eight design wins at major U.S. and European automakers in the third quarter, bringing its year-to date total to 20 contracts. While this segment currently accounts for a relatively small piece of the revenue pie, we look for this percentage to increase markedly over the longer-term horizon.
Looking forward, management gave strong guidance for the December quarter and for full-year 2018. Sales for the fourth quarter are likely to be $19 billion, plus or minus $500 million. Share net for the same period on a non-GAAP basis is likely to be $1.22. For the full year, the top line is expected to top $71 billion, while earnings per share should clock in at more than $4.50. We are onboard with these estimates. In fact, over the past several quarters Intel has outpaced (and sometimes handily) its guidance.
The investment community's initial reaction to Intel's strong third-quarter performance was positive, with the stock advancing by a mid-single-digit percentage in after-hours trading. However, those gains have been pared some this morning with the technology sector looking at a weaker opening to start the day. That said, the third-quarter results should provide some near-term support for Intel stock in a volatile broader market, and there are many things to like here from an investment perspective. These shares have ample room to run based on our long-term projections. In fact, we think the stock has the potential to double in price by the 2021-2023 time frame. The company also pays a handsome dividend, which isn't a common occurrence in the technology sector. Current Intel shareholders might want to consider adding to their positions based on the solid forecast announced by the company. And those on the outside looking in right now may want to put some chips on the table, and add this high-quality stock to their portfolios.
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
