Intel Posts Great Earnings. In the fourth quarter Intel announced the $2 billion acquisition of artificial intelligence chip company Habana Labs..By Todd Horwitz, Bubba Trading

 

 

Intel Corp. posted strong fourth-quarter earnings that benefited from an upswing in personal-computer equipment and robust demand for chips to power data centers.

The chip maker Thursday said adjusted earnings per share in the quarter rose to $1.52 from $1.28 in the year-prior period. Analysts surveyed by FactSet were expecting $1.25 per share on an adjusted basis. Sales in the period rose 8% to $20.21 billion, beating the $19.23 billion analysts had expected. The company’s shares rose around 6% in after-hours trading.

In the fourth quarter Intel announced the $2 billion acquisition of artificial intelligence chip company Habana Labs and completed the sale of the majority of its smartphone modem business to Apple. The company also told customers that PC chips were in short supply. Intel CEO Bob Swan said on a conference call with analysts on Thursday that PC chip supply remained tight.

“We think that Intel’s PC chip shortages likely resulted in some PC business being pushed from the December quarter into the March-2020 quarter, which we think could cause Intel’s CCG revenue in the March quarter to be higher than usual, despite a sequential seasonal step down,” Nomura Instinet analysts led by David Wong, who have a buy rating on Intel stock, wrote in a note to clients on Jan. 15.

Meanwhile, Intel has faced greater competition from AMD, which has beat it to market with chips featuring small 7-nanometer transistors. “It looks like INTC’s 10nm server MPU [microprocessor unit] is at least one full year behind AMD, and we expect INTC to lose 2,000bps of server share to AMD over the next two years,” Jefferies analysts led by Mark Lipacis, who rate Intel a hold, wrote in a note on Tuesday.

Swan said on Thursday that Intel’s first 7-nanometer chips are scheduled to arrive in 2022. “We are also planning for an increasingly competitive environment as we move through the year,” said George Davis, Intel’s finance chief. “As a result of these dynamics, we expect total revenue to be more front-end loaded in the first half then we seen historically.”
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Todd “Bubba” Horwitz

Financial Markets and Political Commentary

 

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Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.