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Intel Corp. Fellowship of the Healthy Giant in the Aftermath of the Aftermath
Intel
INTC, + 4.46%
sur shares shares shares 6 shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares shares The stock dropped to a loss, though, at the end of a conference call as Intel executives discussed 10-nanometer chips and their effect on margins, and were last up 1%.
Chief Engineering Officer Venkata Renduchintala said on the call it could not give any specific numbers on the 10-nanometer rollout but said the process was "roughly in line" with that of when their 14-nanometer chips were rolled out. Uncertainty about the fate of Intel's delayed 10-nm chips has been crawling enough to spark rumors that the chip maker was completely abandoning it, rumors that Intel quickly dispelled.
"Nanometers," or nm, refers to a small chip maker that can make the transistors that go on a computer chip, with the general rule being that smaller transistors are more efficient in using power. Advanced Micro Devices Inc.
AMD, -15.45%
has been chipping away at Intel's dominance and its 7nm chip manufacturing process has been hailed as equal or even superior to Intel's.
From Wednesday: AMD's poor outlook, crypto-chip slowdown intensify swoon in semiconductor sector
"We believe we'll have 10-nanometer shipping by 2019 holiday," Renduchintala said. "And if anything I feel more confident about this quarter than I did a quarter ago."
That's not enough, but it's expected to weigh in on gross margins in the fourth quarter of 2019 "by roughly a few points," said Intel Chief Financial Officer Bob Swan, who is serving as interim chief executive.
"That's a function of the progress we're making on 10-nanometer," Swan said, noting that the 65.9% gross margin reported for the third quarter was "artificially high."
Late Thursday, Intel reported third-quarter net income of $ 6.4 trillion, or $ 1.38 a share, compared with $ 4.52 trillion, or 94 cents a share, in the year-ago period. Adjusted earnings were $ 1.40 a share. Intel was expected to post adjusted earnings of $ 1.15, according to analysts surveyed by FactSet.
Revenue rose to $ 19.16 billion from $ 16.15 billion in the year-ago period. Wall Street expected revenue of $ 18.13 billion from Intel, according to the FactSet consensus.
Data-center group, Gold DGC, revenue surged 26% to $ 6.1 billion from a year ago, topping Wall Street's expectation of $ 5.89 billion. That was an important performance of Intel, which is dominant in server chips but has faced challenges in that area of AMD and Nvidia Corp.
NVDA, + 4.23%
"As expected, data-center is carrying the company in growth terms," Maribel Lopez, senior analyst at Lopez Research, told MarketWatch.
Do not miss: This chip is a warning flag for the chip sector
Revenue from Intel's largest segment, PC-based gold-computing client, rose 16 percent to $ 10.2 billion, while analysts expected revenue of $ 9.33 billion. Intel has reportedly been dealing with issues with the production of chips that have been made to appear as high as possible.
Smaller business units were not as strong as expected. Nonvolatile memory solutions revenue grew 21% to $ 1.1 billion, while analysts had forecast $ 1.14 billion. "Internet of Things," or IoT, returned 8% to $ 919 million from a year ago, while Wall Street expected $ 952.4 million.
Earnings from $ 19.2 billion for the fourth quarter, and $ 4.53 on the share of $ 71.2 billion for the year. Analysts on average earnings of $ 1.09 on a share of $ 18.41 billion for the fourth quarter, and $ 4.15 on a share of $ 69.54 billion for the year.
Intel shares rose 4.5% in the regular session to close at $ 44.31. In comparison, the PHLX Semiconductor Index
SOX, + 2.34%
finished Thursday up 2.3%, the Dow Jones Industrial Average
DJIA, + 1.63%
rose 1.6%, the S & P 500 index
SPX, + 1.86%
advanced 1.9%, and the tech-heavy Nasdaq Composite Index
COMP + 2.95%
gained 3%.
Like Xilinx Inc.
XLNX, + 15.01%
Intel's outlook is set to be one of the sector's earnings exceptions. Late Wednesday, AMD reported an outlook that fell short of Wall Street estimates, and other chip makers reported similarly weak outlooks earlier in the week.
Do not miss: Big drops for AMD and Nvidia fuel 'death cross' for chip sector ahead of earnings
Of the 40 analysts who cover the Intel, 20 have buy or overweight ratings, 14 have hold ratings and six have sell or underweight ratings, with an average price target of $ 55.39. For the year, Intel shares were down 4%, compared with a 6.4% decline in the SOX index, about 1% gains in the Dow and S & P 500, and a 6% rise in the Nasdaq.
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