Q4 Preview: Intel (INTC) Expected to Have Plain Vanilla Results as PC Numbers Could Be Overblown

Intel (Nasdaq: INTC) shares are underperforming the broader stock market Thursday afternoon heading into the company's fourth-quarter 2011 report. While the Nasdaq is up about 0.5 percent at last check, Intel shares are up just 0.04 percent.

After the market closes, Intel is expected to report earnings of 61 cents per share and revenue of $13.72 billion. The company reported earnings of 59 cents per share reported in the same period last year.

Shares gained 14.7 percent to $24.25 through the quarter, and are about 5.1 percent higher in 2012 to-date. Intel shares have traded within a range of $19.16 to $25.92 over the last year.

Key outlook ranges from Intel with last quarter's fourth-quarter report: revs of $14.7 billion +/- $500 million, gross margin of 65 percent +/- "a couple of points," R&D and MG&A spending of $4.3 billion.

Data from Bloomberg has 25 analysts at Buy, 23 with a Hold, and four maintaining a Sell rating on Intel. The price target average on the Street is $26.50, with a low of $21 and high of $24.

Analyst Comments

• JPMorgan is modeling for earnings of 62 cents per share, revenue of $13.70 billion, and gross margin of 64.5 percent. Though JPMorgan did not comment specifically about the quarter, the firm released a note saying it felt there were better opportunities elsewhere. The firm is modeling Intel's margins to decline 190 basis points to 60.6 percent in 2012 and 2013.
  
  JPMorgan is concerned Intel has continued as the only semi without a significant EPS cut. While the industry has seen estimates trimmed 26 percent on average for 2011, Intel's is down only 3 percent to $2.39.
  
  JPMorgan sees Intel not having solid in-roads into the tablet universe. The three disadvantages it has with ARM Holdings (Nasdaq: ARMH) are computing power, cost, and software.
  
  
• Wedbush is modeling for an in-line quarter, with earnings of 61 cents per share and revenue of $13.698 billion. Wedbush commented, "While we continue to be impressed with Intel’s (1) product mix, (2) marketing initiative for Ultrabooks, and (3) strong balance sheet, we think shares are fairly valued here and will likely be range-bound until there is better visibility on consumers’ adoption rates of Ultrabooks and Intel’s ability to penetrate the mobile market with its x85 architecture."
  
  
• Deutsche Bank is looking for EPS of 62 cents, gross margin of 64.4 percent, and revs of $13.7 billion. Key focus items include: "1) Product mix, 2) PC unit growth, 3) share loss/gains vs. AMD, 4) inventory levels, 5) progress in non-core markets."
  
  
• Kaufman Bros. is looking for earnings of 60 cents and revenue of $13.713 billion. Kaufman sees some upside to numbers as "checks are suggesting INTC's higher margin server business ended the quarter stronger than expected, and better than anticipated results from the hard disk drive (HDD) makers from a supply side. In general, it is clear to us that the overall state of HDD market was better than originally forecast, but at this point we are not sure how this translates in 4Q11 performance."

Stay tuned to StreetInsider.com's href="http://www.streetinsider.com/portal/Earnings+Insider/5.html">EPS
Insider section to see our analysis of the highly-anticipated
quarterly results within seconds of their release. You can also check
out Intel's past performance at Streetinsider's href="http://www.streetinsider.com/stock_lookup.php?q=intc&financials=income"
target="_blank">Intel's Income Statement.

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Walmart (WMT) PT Lowered to $130 at UBS on Investment Narrative's Competing Dynamics
• Morgan Stanley course-corrects their semiconductor equipment outlook on demand
• Beike (BEKE) PT Raised to $23 at Morgan Stanley