In August, Mohnish Pabrai took part in Brown University's Value Investing Speaker Series, answering a series of questions from students. Q3 2021 hedge fund letters, conferences and more One of the topics he covered was the issue of finding cheap equities, a process the value investor has plenty of experience with. Cheap Stocks In the Read More
The Estimize consensus calls for revenue of $14.817 billion and EPS of $0.64, slightly higher than Wall Street’s estimates
Intel recently acquired chip maker, Altera, for $16.7 billion
Intel is shifting its resources towards its data centers and IoT sectors, where it has witnessed double digit growth
This past year was tough for the global semiconductor industry. Weakened demand for personal computers and currency headwinds from a strong U.S. dollar are largely to blame for a decline in the market. Consequently, Intel (INTC), the leading semiconductor producer, is poised for an underwhelming earnings call. The Estimize consensus calls for revenue of $14.817 billion and EPS of $0.64 when the chip maker reports Q4 2015 earnings this Thursday. Compared to Q4 2015, this represents a 1% increase in revenue and 12% decline in EPS. Despite a seasonal rise in revenue, Intel is expected to post marginal declines in revenue and EPS for the full year. A struggling PC market has caused Intel to shift its focus to data centers and Internet of Things (IoT) where it has witnessed double digit growth. Intel’s latest of acquisition of Altera is prepared to have a huge impact on the company’s data center growth. By merging Intel’s Xeon processors and Altera’s Field Programmable Gate Arrays, Intel expects to accelerate the next generation of highly customized, integrated products and solutions. Amid a tumultuous 2015, the chip maker is bringing positive momentum into what is expected to be a rebound year. Headwinds in the semiconductor and PC market has become a challenge to many leading technology companies. Although Intel has been hit by the weakness in these markets, they have positioned themselves in several verticals to help mitigate any losses. Hence, the slowdown in the PC market was balanced by double digit growth in data centers and IoT. At the moment Intel holds a formidable 99% of market share in server chips and recently acquired Altera to bolster its stranglehold over data centers and IoT. The internet of things remains a key theme in 2016 as virtual reality, autonomous cars and smart homes come to mainstream markets. In the near future, these trends will result in a structural increase in semiconductor products for Intel. That being said, macroeconomic volatility such as weak demand, rising interest rates and a strong dollar will put pressure on Intel’s earnings.
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Photo Credit: Josh Bancroft