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Intel Releases Q2 Earnings But Significant Chip Delay Is Concerning

By John F. Heerdink, Jr.

Intel Corporation (INTC) reported Q2 earnings last week exceeding the street’s expectations, however, announced the delay of next-gen chips with tiny 7-nanometer transistors for better performance as it discovered an issue in the manufacturing process leading to lower yields of the chips. Intel now expects to launch its first 7-nanometer chip shipments by 2022 end or early 2023, as informed by CEO Bob Swan. The company forecasts adjusted EPS of $1.10 in earnings per share and revenue of $18.2 billion for its fiscal third quarter, lower than analyst’s estimates of $1.14 per share, and revenue of $17.90 billion.

“We will continue to invest in our future process technology roadmap but we will be pragmatic and objective in deploying the process technology that delivers the most predictability and performance for our customers, whether that be on our process, external foundry process, or a combination of both,” CEO Bob Swan.

Key figures from the earnings release:

  • Adjusted EPS of $1.23 per share was reported, versus $1.11 expected.
  • Revenue of $19.73 billion generated in comparison to $18.55 billion as expected by analysts.
  • Intel’s full-year forecast sees an adjusted EPS of $4.85 and $75 billion in revenue, depicting a 4% growth, lower than its announcement in January with an EPS of $5 and $73.5 billion in revenue.
  • Intel’s revenue increased 20% year over year for the quarter ending June 27, compared with 23% growth one quarter earlier.
  • The Client Computing Group that makes chips for PCs, delivered $9.50 billion in revenue in the quarter, growing 7% on an annualized basis.
  • The Data Center Group, focusing on chips for cloud providers and server makers, generated $7.12 billion in revenue, up 43% and above estimates of $6.61 billion.
  • The Non-Volatile Memory Solutions Group contributed $1.66 billion in revenue, a 76% growth for the unit.
  • In the quarter Intel announced the $900 million acquisition of mobility start-up Moovit and the $150 million sales of its home gateway platform business to MaxLinear. 

Intel Corporation (INTC) seeks to expand the boundaries of technology to provide the most amazing experience possible while designing, manufacturing, and selling integrated digital technology globally. To learn more about Intel Corporation (INTC) and to track its progress please visit the Vista Partners Intel Corporation Coverage Page. by 

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.

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(Read Original Story: Intel offers disappointing Q3 earnings guidance as it delays next-generation chips in CNBC)


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