When Intel Corp. (Nasdaq: INTC) reports its third-quarter earnings after the market close today (Tuesday), the world's largest chipmaker should get a boost from the improving PC market.
The Q3 INTC earnings will also tell investors whether Santa Clara, Calif.-based Intel has been able to make any headway in its lagging mobile business. In addition, we'll learn whether its one-year-old Internet of Things initiative is still on track.
Here's what investors need to know about the Q3 Intel earnings:
What to Watch for in the INTC Earnings for Q3The Numbers: The consensus for earnings per share (EPS) is $0.65, up from $0.58 in the same quarter a year ago. Revenue is expected to come in at $14.45 billion, up from $13.5 billion last year.
Intel NASDAQ: INTC Oct 14 01:52 PM loading chart... Price: 32.28 | Ch: 0.81 (2.5%)The History: Last time INTC posted a beat, earning $0.55 a share versus expectations of $0.52. Revenue was $13.83 billion versus expectations of $13.69 billion. Gross margins grew from 59.6% to 64.5% over the previous quarter.
The Stock: Intel stock is up nearly 39% over the past 12 months and more than 25% year to date, despite the recent market drop. INTC stock closed at $31.47 on Monday. The average one-year target price is $35.
The Background: Long the beneficiary of the boom in PCs from the 1980s through the end of the 1990s, INTC has struggled as consumer tastes have shifted to mobile devices. In recent years, Intel has sought to fight back by focusing on tailoring chips for mobile devices as well as the Internet of Things.
DON'T MISS: Most investors know tech is great for growth, but there are two tech sectors in particular that have many glorious days ahead of them...
The Keys to the Quarter: Investors will be looking hard at Intel's mobile results, which were awful in the previous two quarters. Mobile Group revenue was down 61% year over year in the company's first quarter, and down 83% year over year in the second quarter. However, a deal Intel made in May with Chinese semiconductor company Rockchip could pay off in this quarter.
Intel should do very well with its PC chip business, in part thanks to its old pal Microsoft Corp. (Nasdaq: MSFT). The steep decline in PC shipments in 2013 slowed considerably this year. Many businesses and some retail customers were forced to upgrade to new PCs when Microsoft ended support for the 13-year-old operating system in April. The PC chip business still makes up 63% of Intel's revenue.
Investors should also watch for better margins in INTC's data center business, responsible for about one quarter of revenue. Here, too, the company is reaping the benefit of an upgrade cycle as well as the growth of cloud computing.
The Internet of Things: Intel has wisely targeted this area for future growth. While representing only 4% of sales now, the IoT Group saw revenue rise 24% in the last quarter. More of the same in Q3 would be a very positive sign for future INTC earnings growth. The IoT opens up huge markets for Intel. As the IoT grows, millions of chips will be embedded in objects like wearable technology and household appliances. Business Insider Intelligence estimates that by 2019 the Internet of Things will be double the size of all other chip markets combined.
Intel should also give an update on its stock buyback program.
How to profit from wearable tech today: To be sure, Intel has been making a lot of smart moves this year. That's why Money Morning Tech Specialist Michael Robinson has told his readers INTC is a buy. But Robinson also has found a way to pack the power of Intel plus three other wearable tech companies into a single play. This strategy offers both safety and big profits...
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Tags: INTC, intc earnings, intc stock, intel earnings, Intel Q3 earnings, intel stock, Nasdaq: INTC, Q3 INTC earnings, Q3 Intel earningsThe post Q3 INTC Earnings: Watch for Progress in These Key Areas appeared first on Money Morning - Only the News You Can Profit From.
