Intel Corporation (INTC) Q4 Earnings – Analysts React
Stifel on Intel Corporation
After the market close Intel reported 4Q15 results with revenue of $14.9 billion, an increase of 1.3% y/y and 3.1% q/q and beating consensus revenue expectations of $14.8 billion, and EPS of $0.74 well ahead of the consensus of $0.63. We were particularly interested in results and commentary surrounding Intel’s Data Center Group (DCG) for insights into the demand environment for our coverage with exposure to datacom/data center trends, namely Finisar (FNSR, Hold, $12.62), Lumentum (LITE, Buy, $19.32), Oclaro (OCLR, Buy, $3.64), and Fabrinet (FN, Buy, $22.19 – through OCLR and LITE customer exposure). DCG revenue of $4.3 billion increased 5.3% y/y and 4.1% q/q, but was slightly below consensus of $4.4 billion. Management commentary on DCG trends highlighted excellent 2016 growth coming from the cloud segment, which grew more than 20% y/y in the quarter despite seasonality headwinds, while enterprise segment demand has been behind expectations on macro headwinds – but stabilizing in 2H15. Overall we find the bullish cloud results and commentary to be a positive data point for our optical communications coverage.
Barclays on Intel Corporation
On the earnings call, Intel Corporation noted that the change in capex guidance versus November did not reflect macro factors and was rather due to a close review of the numbers. It also noted that most of the downward revision came from the logic side. Regarding 3D XPoint, it commented that the product is a game changer and that it will ramp up production of 3D NAND and 3D XPoint in China in the second half of 2016.
For 1Q16F, Intel guided for revenue of USD14bn, plus or minus USD500mn, which is better than market expectations of USD13.9bn. However, stripping out contributions from the newly acquired Altera, the company guided for 1Q revenue to decline by ~9% q-q, which is at the lower end of the usual seasonal range and suggests the PC segment could remain lukewarm near term. For full year 2016F, Intel expects revenue to grow by mid to high single digits, and net of contribution from Altera, the implied low-single-digit growth suggests a stabilising PC outlook for 2016F.
RBC on Intel Corporation
Mar-qtr Guidance: Intel Corporation guided Mar-qtr above Street expectations, guiding revenues to $14.1B (GAAP $14.0B). The company also guided gross margins to 62% (GAAP 58%), R&D and MG&A to $5.5B (GAAP $5.6B), amortization of acquisition-related intangibles to $0M (GAAP $100M), equity investments/other to $0M, tax rate to 25% (full year), and depreciation to $1.7B. Key Points: 1) State of PC demand; 2) DCG 15% y/y growth target; 3) ALTR deal update and how #s will consolidate in.