Intel SMASH!!

Yes readers, every so often I get one right. Yesterday I said that Intel (INTC) would easily beat Wall Street’s earnings estimates and I was right.
The Street was looking for 43 cents per share. I said they’d top 45 cents share. The correct answer: 51 cents per share. Make no mistake, this was an outstanding quarter for Intel. The stock is up about 6.7% after-hours.

Intel, the world’s No. 1 chipmaker, said revenue in the three months ended June 26 totaled $10.8 billion, compared with $8 billion in the year-earlier period and the $10.25 billion expected by analysts polled by Thomson Reuters I/B/E/S.
“In a quarter where people expected relatively strong performance, they beat that pretty handily and set a good forecast. They seem unaffected by the negativity that’s impacting equities,” said Charter Equity Research analyst Edward Snyder.
The company posted net income of $2.9 billion, or 51 cents a share, versus a net loss of $398 million, or 7 cents a share, in the second quarter of 2009, when Intel’s results included a $1.4 billion fine by the European Commission.
Analysts had expected earnings of 43 cents per share in the second quarter.
Intel said its gross profit margin in the second quarter was 67 percent, compared with the 64 percent expected by analysts.
Looking forward, Intel estimated revenue in the third quarter of $11.6 billion, plus or minus $400 million, exceeding the $10.92 billion expected by analysts.

I don’t have all the numbers, but here’s some guesswork. Thanks to Intel’s bullish sales forecast, the Street will probably peg this year’s EPS at $2 (give or take). The company’s net cash position is about $2.50 per share. So if the stock goes for 14 times this year’s earnings, which is quite reasonable, plus the cash, then Intel is a $30 stock.

Posted by on July 13th, 2010 at 5:18 pm


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