Intel Modestly Mixed, Alibaba Boosts Yahoo - Analyst Blog

It's another after-the-bell two-fer on Tuesday: semiconductor giant Intel INTC and Internet staple Yahoo YHOO both reported quarterly earnings, both companies were mixed on the top- and bottom-lines. Yet while Intel has seen a modest bump in after-market trading, Yahoo shares broke out to the upside in a big way.

Intel posted earnings of 38 cents per share (a one-cent beat, directly in line with the Zacks ESP) on revenues of $12.76 billion, which was light of the Zacks Consensus Estimate of $12.82 billion. As Intel continues the long process of switching over from PC-based products to mobile-based ones, analysts were prepared to see a bit of a swoon in Q1, and they got it: gross margins down 2.3% quarter over quarter to 59.7%, with EPS down 5% year over year.

Yahoo reported 30 cents per share (including the all-important TAC costs) -- also a one-penny beat over the consensus -- on revenues of $1.07 billion -- just a smidge light of the $1.075 we expected. But it wasn't until details about Alibaba's business came out that YHOO shares spiked.

Yahoo's current issues are far more mercurial than Intel's; while display advertising again posted weak numbers, price-per-click gained 8% year over year. Still not great, and the concern may be that Yahoo has yet to gain the sort of traction analysts had been anticipating for the last year or so. It can be a frustrating stock to hang onto for investors anticipating breakout numbers that still have yet to be realized.

But who's going to sell Yahoo now? The company is sitting on over 20% of what's expected to be one of the very biggest IPOs of 2014, China's e-commerce giant Alibaba. And the Alibaba-specific business continues to wow analysts with terrific numbers. So there's not only a back-stop to any of Yahoo's disappointing near-term execution; in fact, the good news from Alibaba sent YHOO shares up as much as 9% in after-hours trading.

Intel expects 61% gross margins for full-year 2014 on flat revenues year over year. Turning a big ship like Intel around requires steadiness and patience; as long as nothing tips over the side, it looks like investors are willing to hang. INTC stock is up 25% since this time last year and mostly up both before and after the earnings post today.

Both Intel and Yahoo currently register a Zacks Rank #3 (Hold), and are obviously both major plays in technology. Basically, it depends on your tastes as an investor: are you looking for proof of a steadily improving present or hopes of hitting it big in one fell swoop sometime in the future? Estimate revisions have not played much of a part in either company's story for the past several quarters, so even the analysts are waiting to see what's going to happen. Stay tuned.