Intel’s Q3 Earnings: 52 Cents Per Share

After the bell, Intel (INTC) reported Q3 earnings of 52 cents per share. The Street’s consensus was 50 cents per share.

That’s pretty close to what I was expecting. Earlier, I had said that I wasn’t expecting anything great from Intel this time around, unlike three months ago.

The shares have rallied over the past few days. Three months ago, Intel stunned the Street when it reported earnings of 51 cents per share, eight cents more than expectations. But in August, the company lowered its sales forecast to $11 billion, plus or minus $200 million, which is why I was so eager to see what today’s results were. For Q3, sales came in at $11.1 billion. For Q4, Intel sees sales coming in at $11.4 billion, plus or minus $400 million.

The PC industry has struggled in recent months with soft demand in the United States and Europe as well as rising inventories for chips and other components that have led some customers to reduce their orders for new parts.

Global semiconductor sales could grow just 5 percent next year as the economy continues to struggle, according to market research firm iSuppli.

The world’s top microchip maker expects gross margins of 67 percent in the fourth quarter, give or take a couple of percentage points, compared with 66 percent in the third quarter.

Intel’s results were buoyed by a 3 percent sequential increase in data center sales in the quarter, a business with higher margins than chips for PCs.

Some investors believe tech vendors’ sales will pick up in the final months of 2010 as shoppers warily spend on holiday gifts — with an out-sized amount going to smartphones and tablets such as Apple Inc’s iPad while sales of PCs flounder.

Microprocessors made by Intel run 80 percent of the world’s computers, but the Santa Clara, California-based company has yet to develop much presence in smartphones and tablets, which are often powered by energy efficient processors designed by ARM Holdings.

After hours, Intel is up to $20.22. With a quarter to go, Intel is probably on track to earn $2 per share for this year. That’s pretty good. Intel is a decent buy (though not a outstanding one) anytime it’s under $20.

Posted by on October 12th, 2010 at 4:16 pm


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