Intel Corporation (INTC) Expects Flat Revenues For FY2014

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Intel Corporation (NASDAQ:INTC), at its analyst day a few days back, revealed that it expects flat revenues for FY 2014, following which analysts at Canaccord Genuity lowered their revenue estimates and reiterated a Hold rating on the chip maker. Analysts Bobby Burleson and Prabhakar Gowrisankaran said, “We remain on the sidelines expecting weak holiday season sellthrough, driven in part by consumer distraction from competing devices like the new iPad Air, where demand appears to be strong.”

Intel expects flat revenue

Intel Corporation (NASDAQ:INTC) has announced guidance for the FY 2014 where revenue is expected to come in flat year on year compared to consensus estimates of 2% growth year on year. Gross margin is estimated to be 60%, which is the mid-point of the long term estimate of 55% to 65% range, and operating expenses are expected to be flat year on year.

Intel Corporation (NASDAQ:INTC) is expecting flat year on year revenue guidance for the FY2014, which includes low to mid teen growth in Data Center offset by a mid-single-digit drop in PC client sales along with flat Other architecture group sales and low double-digit growth in software and services. Management is estimating capital expenditure to be flat at $11 billion.

The report notes that management at Intel is trying to maintain a dividend yield of 4%, and distribute 40% of free cash flow to shareholders in the form of dividends and share buybacks.

Segment wise outlook

Management also gave an outlook of core business segments of the company including PC Client, Data Center, Software and Mobility, and its strategy for taking growth forward in each of those segments. Data Center is one of the core business segments for Intel with enterprise servers, high performance computing and cloud offerings. Other key growth catalysts, according to Intel, are Internet of Things, Big Data and Software defined infrastructure. Intel is set to gain major traction in this segment along with penetrating into newer higher growth segments such as Cloud, Telco and High performance Compute. The chip maker expects the enterprise servers to contribute 40% of revenue by 2016, which would be a decline over the current level of 50%.

Intel Corporation (NASDAQ:INTC) believes that the PC market is stabilizing with expectations of flat year on year growth in the fourth quarter of 2013, which was an increase over the high-single-digit decline in the last five quarters. Intel is looking forward to 2 in 1 hybrids and detachables priced around $299 price points to gain shares in the tablet market.

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