Intel Expected to Show Profit, Revenue Rise -- Earnings Preview

By Ted Greenwald Features Dow Jones Newswires

Intel Corp. is scheduled to announce second-quarter earnings after the market closes Thursday. Here's what to look for:

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EARNINGS FORECAST: For the quarter that ended in June, analysts expect Intel to report earnings of 68 cents a share on an adjusted basis, according to a survey by Thomson Reuters, up 15% from 59 cents the same quarter a year earlier. Intel's adjusted earnings exclude restructuring charges and certain items arising from acquisitions.

REVENUE FORECAST: Analysts expect total revenue of $14.4 billion for the quarter, up roughly 6% from $13.5 billion the year-earlier quarter.

WHAT TO WATCH:

DATA CENTER GROWTH: Not long ago, Intel expected annual revenue growth in the midteens in the segment that sells chips for the computers that drive cloud services, network providers, and corporate operations. But data-center growth slowed to about 6% in the first quarter as sales to enterprises slowed amid strengthening competition from rival Nvidia Corp., whose graphics processors are well suited to emerging artificial intelligence tasks. Boosting data-center growth is "No. 1, the most important thing," said Srini Pajjuri, an analyst with Macquarie Capital.

PC COMPETITION: The latest quarter was the first full reporting period in years in which Intel faced meaningful competition in personal-computer chips, products that helped drive more than half of total revenue last year. Advanced Micro Devices Inc. in March began shipping its Ryzen chips for desktop computers, which were roughly 40% of the PC market in 2016, according to research firm Gartner Inc. Although AMD's products haven't had much time to prove themselves in the market, investors will be looking for perspective on their impact, according to Tom Sepenzis of Northland Securities Inc.

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NEW MARKETS: Intel is investing heavily in new markets to spur growth as PC sales flag and data centers diversify, and investors will be on the lookout for signs that returns are coming, said Matt Ramsay of Canaccord Genuity Group Inc. Shareholders will watch for information about sales, profit margins, and competitive positioning of memory products, a segment the company has said it expects to become profitable by 2019. They will also want to know about the competitive position of Mobileye NV, a $15.3 billion acquisition that hasn't yet closed, relative to rivals pushing toward fully autonomous vehicles. And they will be looking for updates on the product road map for Altera Corp., which Intel purchased in 2015 for $16.7 billion.

Write to Ted Greenwald at Ted.Greenwald@wsj.com

(END) Dow Jones Newswires

July 27, 2017 08:14 ET (12:14 GMT)