Intel Corporation (INTC) 2Q Earnings: What Happened?

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Intel Corporation (NASDAQ:INTC) posted second quarter GAAP EPS of $0.39, which was in line with the expectations of The Street. However, the revenue at $12.8 billion was below The Street expectations of $12.9 billion.

Intel Corporation (INTC) 2Q Earnings: What Happened?

For the second quarter, gross margin came in at 58.3 percent, an increase of 210 bps from 56.2 percent in the first quarter and more than the guidance of 58 percent. In the second quarter, Intel is expecting gross margin to be 61 percent+/- a couple of points, up 270 bps Q/Q compared to the second quarter. OpEx increased $207 million Q/Q to $4.7 billion, in line with guidance.

Wedbush, in a report, noted positive and negative points in the Intel Corporation (NASDAQ:INTC) Q2 results.

Positive points

Management at Intel notes that the company is undergoing restructuring to simplify the structure and enhance decision making. Additionally, there have been some changes in the strategy and priority will be given to Atom based products.

According to the report, Intel Corporation (NASDAQ:INTC) is upbeat on Haswell and Bay Trail products stating that Haswell enhances the battery life and Bay trail will assist Intel to launch low priced products in the competitive price points, in 2-in-1 hybrids and tablets. Intel is expecting strong performance in its Data Center business fueled by cloud storage, networking and high performance.

 Segments that contributed positively in the second quarter were PC client group and revenue data group.

Capital expenditure is expected to be lower by $1 billion at $11 billion from the previous estimation of $12 billion (+/- $500 million). In the Q2 2013, Capex was $2.7 billion up from $2.2 billion in Q1. The company repurchased 23 million shares for $550 million in Q2.

Negative points

Guidance for the third quarter revenue has been lowered by Intel Corporation (NASDAQ:INTC) at $13.5 billion (+/- $500 million), less than the Street expectation of 13.7 billion and Wedbush’s expectation of $13.6 billion. Intel has lowered its full year guidance due to the decline in PC market.

Wedbush’s take on Intel

Analysts at Wedbush are positive over the reorganizing efforts done by Intel Corporation (NASDAQ:INTC), Atom Chips and slashing of capex. However, implementation, enhancement in gross margin and reaping benefits from the mobile and core business are important. Wedbush has given price target of $23 for 12 months.

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