INTEL BEATS BIG, GUIDES HIGHER
Intel is providing a clearer picture of the upcoming earnings season as they report a blow-out quarter and raise their guidance above street estimates. Shares are trading higher by 5% in the after hours market.
Intel reported 40 cents vs estimates for 30 cents. They also beat on the top line with revenues of $10.6B vs estimates of $10.17B. The company is also guiding revenues for Q1 to $9.7B – well above estimates of $9.35B. The best news of the report is that this isn’t just a margin story. Although margins blew out to 65% the company is also reporting strong top line growth.
As we said with Alcoa, this is just one report and investors would be unwise to place too much emphasis on this single report, however, we feel that Intel’s earnings provide a better idea of what to expect for the rest of earnings season. As our expectation ratio has long predicted, the environment of “better than expected” continues. We now await JP Morgan tomorrow AM.
Nice call TPC. Looks like we’re headed higher tomorrow. I hope you’ll let us know when you turn more cautious. Thanks for all your hard work. You’ve become a must read.
TPC Reply:
January 14th, 2010 at 1:38 PM
Let’s wait and see what happens next week before we start saying I was right. Intel is a very good tell though. MUCH better than Alcoa.
I think the key here is you can stay long with a certain comfort level through the next two weeks. Unless the banks really disappoint to the downside we will likely melt higher. Shorting is nothing short of insane here.
zrch Reply:
January 14th, 2010 at 4:39 PM
Hmmm
Nice call?
TPC 9:45 AM:
I am less concerned with Intel. I think there is a very real chance that they disappoint.
TPC Reply:
January 14th, 2010 at 4:50 PM
I have no position in Intel so….like I said – let’s wait and see in a few weeks to judge whether anything has been a good call. There is no denying that my bullish stance over the last month has paid off, however….The call that stocks would rally into earnings has been dead right.
Intel isn’t really trading much higher. Any thoughts on that? Are we seeing a bit of this sell the news already?
Intel is uniquely positioned right now. They have a chip monopoly. The reason their revenue is up so high is that they just did a chip rev. i3,i5,i7 and all the computer guys, HP, Dell, Gateway and Apple now have to rev to be current. Intel sales just tell you that the PC vendors need to rev, and I think this number is actually rather small. When intel went from the p3 to the P4, their revenue for that first quarter was up nearly 50%. I think summer 2010 will show the true picture for Intel, this will be when all the first Dells, HPs and Apples iChip revs should be needing a reorder. If the reorders are small, then those computers, end demand is as bad as people think.
To add to the last post:
Intel Revenues in Billions:
Q4 2004 8.4
Q4 2005 9.7
Q4 2006 10.2 Stock price: $22
Q4 2007 10.7
Q4 2008 8.2
Q4 2009 9.7 Stock price: $21
Last Chip rev P4 to Core Duo, year 2006
Looks like history is repeating itself. But back in 2006 AMD was competitive, today not so much.
Also, the stock price didn’t move much because nothing has changed much.
TPC Reply:
January 14th, 2010 at 3:48 PM
Nice thoughts. Thanks.
Could also be a Win7 thing. INTC and EWT are about neck and neck over the last 6 mo. As well, the PC makers had hinted that things would be picking up. Don’t see how todays release should have changed any investor’s mind … but I guess that is the power of the ER … it affects all those drones that actually believe estimates.
TPC. Last sentence needs amending: “We not await JP Morgan …” Aside from the typo, ‘tho, what do you anticipate, and – perhaps more to the point – will you really believe anything reported by this monster with its gargantuan, hidden, derivative exposure: do the released results actually mean anything?
TPC Reply:
January 14th, 2010 at 4:38 PM
Thanks Gordon. It looks like we could take a bit of a breather here. I feel totally comfortable staying long over the next few weeks. I think 1200 SP is a very real possibility by the time earnings season is over. The numbers out of Intel looked simply fantastic and any sort of follow-thru from the banks will likely justify a higher multiple on the equity markets.
Intc tops by 33% and sells down 2% and you want to hold this market. I wish you all the luck in the world.
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