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Intel (INTC) Q2 2011 Earnings Preview - Battling Pressure In Tablet Market

 July 14, 2011 11:00 AM

Chip-maker Intel is scheduled to release its second quarter earnings for fiscal year 2011 on July 20. At the end of the quarter ended June 30, it was reported that Intel's market share had edged up in spite of a chip recall. The company had a market share of 82.6 percent of revenue from microprocessors, up 2 percent year over year. However the company is still battling pressure from the tablet market, which is driving down netbook sales. 

Q1 2011 Highlights

  • Intel reported net revenue totaling $12.87 billion, up 25 percent year-over-year as compared with $10.3 billion in the first quarter of fiscal year 2010.
  • Gross margin on a on-GAAP basis shrunk by over 1 percent year-over-year.
  • Operating income on a non-GAAP basis was $4.33 billion, an increase of 24.9 percent year-over-year against $3.5 billion in the same period of fiscal year 2010.
  • Non-GAAP net income came in at $3.3 billion, an increase of $862 million, or 33.8 percent, year over year compared with $2.45 billion in the corresponding quarter of fiscal year 2010.
  • Diluted EPS on a non-GAAP basis was 59 cents, up from 43 cents, in the first quarter of fiscal year 2010.

[Related -Intel Corporation (INTC) and 5 Other Stocks That Could Pop on Earnings This Week]

Intel is expected to earn between $0.49 and $0.55 per share this quarter, with a consensus estimate of $0.51 per share, and a coefficient variance of 3.13. Revenue is expected to be between $12.6 billion and $13.1 billion, with a consensus of $12.8 billion. The company has had to contend with a recall of around 8 million Core Sandy Bridge chipsets last quarter. However, it was still able to take market share from its biggest rival in the space – AMD. The company is pushing its Atom series of low-powered processors, which is currently used for notebooks into the tablet segment. Intel is also hoping to capitalize on the release of the upcoming Windows 8 tablet OS to help sales of its next generation Atom processors. Investors will also be on the lookout for any impact that the Japanese earthquake may have had on the quarter, and for guidance on the region going forward.

[Related -Intel Corporation (INTC) Q4 Earnings Preview: Room To Pop On EPS]

INTC stock last traded at a price of $22.53. The stock has been trading in the range of $17.60 to $23.96 in the past 52 weeks, and has an average target price of $25.53. Intel stock currently has an average recommendation of Overweight from analysts tracking the company.



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