The Good and the Bad of Intel's (INTC) Quarter - Susquehana
Chris Caso from Susquehana think's Intel (NASDAQ: INTC) report was uncharacteristically cautious, as the company recognized China macro concerns beginning to show up in the businesses. The December quarter was slightly ahead of expectations in total, two key areas are likely to raise concerns: the slight downside in Data Center and the cautious commentary regarding China demand which caused the company to trim its core full-year outlook. The analyst thinks numbers were good enough to hold the stock around the current price lack of a positive catalyst and the report leaves us with the lingering concern if China demand should worsen
INTC reported revenue of $14.9 bln, up 3% Q/Q and 1% Y/Y and slightly ahead of guidance of $14.8 bln. EPS of $0.74 beat consensus of $0.63 but included a $0.09/share benefit from a lower than expected tax rate. GM improved 130bps Q/Q and came in at 64.3%, ahead of guidance of 62%. Opex increased 8% to $5.2 bln,
Upside relative to estimates came from the Client Computing Group (CCG) where revenue increased 3% Q/Q, vs. flat Q/Q expectations, but declined 1% Y/Y (fourth consecutive quarter of Y/Y declines). CCG units were flat while ASPs rose 5% Q/Q due to a richer mix of Core i7 products in the quarter. For C15, CCG revenue was down 8% Y/Y. Data Center Group (DCG) revenue was up 4% Q/Q in 4Q, below our +7% Q/Q estimate and finished the year up 11% Y/Y. IoT revenue was in-line and grew 7% Q/Q, while software and services revenue declined 2% Q/Q vs. our +1% Q/Q estimate.
Maintaining Neutral rating and $32 price target
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Shares of Intel closed at $32.74 yesterday.