We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Top-Line Contraction Hurt Intel (INTC) Q1 Earnings?
Read MoreHide Full Article
Intel Corporation (INTC - Free Report) is scheduled to report first-quarter 2022 results after the closing bell on Apr 28. In the last reported quarter, adjusted earnings beat the Zacks Consensus Estimate by 19 cents. In the first quarter, the company is likely to have recorded lower revenues year over year due to challenging macroeconomic conditions and divestment of businesses.
Factors at Play
During the quarter, Intel collaborated with Hepsiburada to launch an e-commerce platform for small and medium enterprises (SMEs) in Turkey. Dubbed DigitalSME, the program is likely to accelerate the digital transformation of local SMEs and drive the region's overall economic growth. Intel is betting big on the IoT business and is investing heavily to gain a higher market presence. While the focus was earlier on making the best computing chips and generating industry-leading margins from them, the company now prefers to focus on a product range targeting different market segments. Management believes that though the higher-end business in more developed economies continues to look up, the strategy should help it get into many more device categories, where Intel products will enjoy a premium based on performance and cost of ownership. Such initiatives are likely to get reflected in the upcoming results.
In the to-be-reported quarter, Intel introduced the vPro platform with 12th Gen Intel Core processors for business productivity. The latest platform provides the highest performance and most comprehensive security for businesses of all sizes. Intel vPro delivers a wide array of computing solutions, which cater to nearly every type of worker at any business.
During the quarter, Intel announced that the first phase of the sale of its NAND and SSD Business to Seoul-based SK Hynix has been completed. The first transaction includes the sale of its SSD business and transfer of certain NAND and SSD-related intellectual property, employees and the Dalian NAND memory manufacturing facility in China. Intel’s sale of its manufacturing facility in China is in accordance with its long-term strategic goals. The company is gradually reducing its dependence on the PC-centric business by transitioning into data-centric businesses such as AI and autonomous driving. The divestitures are likely to have contracted the revenue base on a year-over-year basis.
In addition, the prolonged Ukraine-Russia war has hampered the company's operations, and it has exited the Russian market owing to U.S. sanctions. This is likely to have led to top-line contraction and increased pricing pressure. It might limit margin expansion in the near term.
The Zacks Consensus Estimate for total revenues of the company stands at $18,320 million, indicating a decline from $19,673 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 80 cents per share. It had reported $1.39 in the year-earlier quarter.
Key Developments in Q1
In the first quarter, Intel announced a deal to acquire Granulate Cloud Solutions Ltd for an undisclosed amount. Granulate’s approach to real-time optimization software complements Intel’s capabilities by helping customers achieve greater performance. Intel plans to rapidly scale Granulate’s optimization software across its data center portfolio. The acquisition will help cloud and data center customers enhance compute workload performance and reduce infrastructure and cloud costs.
Intel is witnessing intensifying competition in the server, storage and networking markets. Moreover, delay in 7 nm process-based chips is a major concern. The company detected a defect mode in the 7 nm process, which caused yield degradation. Notably, Intel’s chips utilize process technologies that are designed in-house. INTL anticipates the release of data center GPU design, Ponte Vecchio, sometime this year. The chipmaker now expects initial production shipments of the first Intel-based 7 nm client CPU in late 2022 or early 2023. Moreover, initial production shipments of Intel’s first in house-based 7-nm data center CPU design are scheduled in the first half of 2023.
Earnings Whispers
Our proven model does not predict an earnings beat for Intel for the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
The Earnings ESP for T-Mobile US, Inc. (TMUS - Free Report) is +23.36% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Apr 27.
The Earnings ESP for Telephone and Data Systems, Inc. (TDS - Free Report) is +34.62% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on May 5.
Image: Bigstock
Will Top-Line Contraction Hurt Intel (INTC) Q1 Earnings?
Intel Corporation (INTC - Free Report) is scheduled to report first-quarter 2022 results after the closing bell on Apr 28. In the last reported quarter, adjusted earnings beat the Zacks Consensus Estimate by 19 cents. In the first quarter, the company is likely to have recorded lower revenues year over year due to challenging macroeconomic conditions and divestment of businesses.
Factors at Play
During the quarter, Intel collaborated with Hepsiburada to launch an e-commerce platform for small and medium enterprises (SMEs) in Turkey. Dubbed DigitalSME, the program is likely to accelerate the digital transformation of local SMEs and drive the region's overall economic growth. Intel is betting big on the IoT business and is investing heavily to gain a higher market presence. While the focus was earlier on making the best computing chips and generating industry-leading margins from them, the company now prefers to focus on a product range targeting different market segments. Management believes that though the higher-end business in more developed economies continues to look up, the strategy should help it get into many more device categories, where Intel products will enjoy a premium based on performance and cost of ownership. Such initiatives are likely to get reflected in the upcoming results.
In the to-be-reported quarter, Intel introduced the vPro platform with 12th Gen Intel Core processors for business productivity. The latest platform provides the highest performance and most comprehensive security for businesses of all sizes. Intel vPro delivers a wide array of computing solutions, which cater to nearly every type of worker at any business.
During the quarter, Intel announced that the first phase of the sale of its NAND and SSD Business to Seoul-based SK Hynix has been completed. The first transaction includes the sale of its SSD business and transfer of certain NAND and SSD-related intellectual property, employees and the Dalian NAND memory manufacturing facility in China. Intel’s sale of its manufacturing facility in China is in accordance with its long-term strategic goals. The company is gradually reducing its dependence on the PC-centric business by transitioning into data-centric businesses such as AI and autonomous driving. The divestitures are likely to have contracted the revenue base on a year-over-year basis.
In addition, the prolonged Ukraine-Russia war has hampered the company's operations, and it has exited the Russian market owing to U.S. sanctions. This is likely to have led to top-line contraction and increased pricing pressure. It might limit margin expansion in the near term.
The Zacks Consensus Estimate for total revenues of the company stands at $18,320 million, indicating a decline from $19,673 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 80 cents per share. It had reported $1.39 in the year-earlier quarter.
Key Developments in Q1
In the first quarter, Intel announced a deal to acquire Granulate Cloud Solutions Ltd for an undisclosed amount. Granulate’s approach to real-time optimization software complements Intel’s capabilities by helping customers achieve greater performance. Intel plans to rapidly scale Granulate’s optimization software across its data center portfolio. The acquisition will help cloud and data center customers enhance compute workload performance and reduce infrastructure and cloud costs.
Intel is witnessing intensifying competition in the server, storage and networking markets. Moreover, delay in 7 nm process-based chips is a major concern. The company detected a defect mode in the 7 nm process, which caused yield degradation. Notably, Intel’s chips utilize process technologies that are designed in-house. INTL anticipates the release of data center GPU design, Ponte Vecchio, sometime this year. The chipmaker now expects initial production shipments of the first Intel-based 7 nm client CPU in late 2022 or early 2023. Moreover, initial production shipments of Intel’s first in house-based 7-nm data center CPU design are scheduled in the first half of 2023.
Earnings Whispers
Our proven model does not predict an earnings beat for Intel for the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Intel Corporation Price and EPS Surprise
Intel Corporation price-eps-surprise | Intel Corporation Quote
Zacks Rank: Intel has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Amazon.com, Inc. (AMZN - Free Report) is set to release quarterly numbers on Apr 28. It has an Earnings ESP of +37.95% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for T-Mobile US, Inc. (TMUS - Free Report) is +23.36% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Apr 27.
The Earnings ESP for Telephone and Data Systems, Inc. (TDS - Free Report) is +34.62% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on May 5.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.