I saw this article on Yahoo Finance (Investopedia article dated 7/19) and wondered what everyone's opinion is. What do you think the stock will do after earnings and why?
The report that the semiconductor giant has won chip placement in Apple, Inc.'s (AAPL) upcoming iPhone 7 is seen as a major breakthrough for Intel, especially since it removes one more layer of dependency on personal computer sales. But by how much? This question will be answered on Wednesday when Intel issues guidance for the third quarter and fiscal year.
The Santa Clara, Calif.-based company is set to report second-quarter earnings results after the closing bell Wednesday. For the quarter that ended June, the company is expected to report 53 cents per share on revenue of $13.54 billion. This compares to the year-ago quarter when Intel reported earnings of 55 cents per share on revenue of $13.2 billion. (See also: Intel Stock Rises on Analysts' Upgrades.)
Ahead of the result, INTC stock has risen more than 10% over the past months, suggesting there's plenty of confidence that the company, which has beaten analysts estimates in four straight quarters, not only will exceed its numbers Wednesday, but also raise guidance. That's a huge bet, however. Although the inclusion in Apple's iPhones will be an incremental boost to its Client Computing Group (CCG) revenue, Apple's iPhone sales are on the decline.
What's more, CCG, which contains its PC and mobile processor business, suffered a 15% decline in first-quarter volumes. With Gartner reporting that PC sales declined 5.2% in the second quarter, this is likely to impact volumes even more. The question is, to what extent can Intel's average selling prices (ASP) rise to levels where it offsets the decline in sales?
Analysts will also be curious to learn the extent to which the Data Center Group (DCG) segment, which contains server/networking, can offset any pressure Intel might face this quarter in CCG? In the first quarter, while DCG revenue rose 9%, ASPs declined 3%. Is Intel Stock a Buy?)
Managing growth and costs will be the theme of this quarter and quarters to follow, and with the excitement surrounding its inclusion in Apple's iPhone sending its shares higher, the company will also need to do a solid job managing expectations.
Read more: A Look Inside Intel Ahead of Earnings (INTC, AAPL) | Investopedia http://www.investopedia.com/articles/investing/072016/look-inside-intel-ahead-earnings-intc-aapl.asp#ixzz4ExlbOF00