Intel Earnings Preview: A First Look At Semiconductors

Intel INTC, which has set its sights on wearable technology, gaming and the Internet of Things in its effort to move away from the dwindling PC market, is scheduled to report its first-quarter 2014 results on Tuesday, April 15, after the markets close. As a member of the Dow Jones Industrial Average, S&P 500 and Nasdaq 100, Intel has significant market influence, and it is the first major semiconductor company to share first-quarter results. Among other things, investors will be looking for news of further share buybacks. See also: Intel Announces Changes to Financial Reporting Structure Expectations Analysts on average predict that Intel will report revenue for the quarter that inched up less than two percent year-over-year to $12.81 billion. Per-share earnings are expected to come to $0.37, which would be more than seven percent lower than in the same quarter of last year. The analysts seem fairly certain, as individual earnings per share (EPS) estimates range from just $0.34 to $0.43, the consensus estimate is the same as it was 60 days ago. But note that Intel missed consensus EPS expectations by a penny in three of the past four quarters. The CEO said in the fourth-quarter report, "We had a solid fourth quarter with signs of stabilization in the PC segment and financial growth from a year ago." But Intel warned that revenue for the first quarter would decline and for the full year would be flat. The share price dropped more than five percent in the days following the report. Looking ahead to the current quarter, the forecast currently calls for sequential and year-over-year growth of EPS, and that consensus EPS estimate is also unchanged in the past 60 days. Revenue is expected to show a gain of less than two percent, relative to a year ago. The Company Intel is still the world's largest semiconductor chip maker. The company markets its products primarily to original equipment manufacturers, original design manufacturers and industrial and communications equipment manufacturers in the computing and communications industries. This Dow Jones Industrial Average component was founded in 1968 and is headquartered in Santa Clara, California. Its market capitalization is around $130 billion. Brian Krzanich has been the chief executive and Renee James has been president since May 2013. Andy Bryant has been chairman of the board since May 2012. Competitors include Advanced Micro Devices and Texas Instruments. Analysts predict that the former will break even but with a gain of more than 23 percent in sales. Texas Instruments' EPS are expected to have jumped about 22 percent from a year ago while its revenues grew more than two percent. Both companies are scheduled to report their results in the next week or two. During the three months that ended in March, Intel founded the Industrial Internet Consortium, along with GE, IBM AT&T and others, to create standards for the Internet of Things. It completed the acquisition of BASIS Science, announced Intel-based 64-bit tablets and said it would sell some media assets to Verizon Communications. See also: Verizon to Acquire Intel Media Assets; Terms Not Disclosed Performance Intel's long-term EPS growth forecast is only about five percent, but the price-to-earnings (P/E) ratio of 13.9 is less those of Qualcomm or Texas Instruments. Intel's return on equity is more than 17 percent and its operating margin is almost 24 percent. It offers a dividend yield of about 3.4 percent. The number of shares sold short, as of the most recent settlement date, represents more than four percent of the float. That was the second highest level of short interest since the beginning of the year. At the current average daily volume, it would take about seven days to cover all short positions. The consensus recommendation of the analysts surveyed by Thomson/First Call who follow the stock is to hold Intel shares, though it has more Buy ratings than Underperform ones. However, the analysts' mean price target, or where they expect the stock to go, is less than the current share price. The share price approached the 52-week high this week before pulling back with the rest of the broader markets. Shares are still trading less than three percent higher year to date. Over the past six months, the stock has narrowly outperformed AMD, Texas Instruments and the broader markets. At the time of this writing, the author had no position in the mentioned equities. Keep up with all the latest breaking news and trading ideas by following us on Twitter.