What Investors Should Expect When Intel Corp. Reports Fourth-Quarter Earnings

By Anders Bylund Markets Fool.com

Intel (NASDAQ: INTC) is gearing up for another earnings report. The semiconductor giant is slated to post fourth-quarter results after the closing bell on Thursday, Jan. 26. Here's what investors should look for in this update.

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Intel by the numbers

Intel's official guidance for the fourth quarter points to revenue rising approximately 5% year over year, stopping at $15.7 billion. GAAP earnings are expected to fall 8% to $0.68 per diluted share.

In the third quarter, sales growth was spearheaded by double-digit annual percentage boosts in the Internet of Things and data center groups. Both of these divisions are enjoying solid long-term growth, setting the stage for another round of big growth numbers on Thursday. In particular, the rise in data center revenue rests on cloud computing solutions. IoT growth stems from Intel's efforts in selling embedded video, retail, and transportation products.

Taking a longer view of Intel's financial performance, the company's earnings and cash flows have held relatively steady over the last three years. Sales have been ticking upward in recent quarters.

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Digging deeper

Beyond the raw numbers, Intel is in the middle of a large-scale strategy transition. Ten years ago, Intel lived and died by the market for PC systems. Now, roughly half of the company's sales come from data center and Internet of Things products. That ratio is likely to tip even further, here and in future reports.

In the third-quarter earnings call and recent presentations, Intel executives repeatedly hammered this point home."Ten years ago, we were almost entirely dependent on the PC market for a growth in our profitability," said Stacy Smith, former CFO and now EVP of Intel's manufacturing and sales, at the Credit Suisse conference in November. "Today, more than half of our profits come from the Internet of Things, and the data center and the memory business and things like that. So it's a very different company from what it was 10 years ago and it will be a very different company 10 years from now."

Image source: Intel.

The latest news

Intel has not been sitting on its hands. These are some of the company's most interesting recent moves, likely to be discussed in Thursday's earnings release and conference call:

  • On Monday, Intel declared a quarterly dividend of $0.26 per share. That's the same payout as the last four quarters, breaking a two-year streak of dividend boosts in January's announcements.
  • Two weeks ago, the company announced a new platform for retail analytics and a robotic retail assistant. Intel plans to invest $100 million into retail-related IoT solutions over the next five years, and this was a taste of things to come.
  • In early January, Intel acquired a 15% stake in the HERE self-driving car platform, managed by a coalition of German automakers. There was no word on the investment's size in dollars or euros, but the move dovetails neatly into Intel's recently announced plans to invest $250 million into autonomous vehicle tech over the next two years.

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Anders Bylund owns shares of Intel. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.