What's ahead for Intel
Posted
Oct 13 2009, 08:06 PM
by
InvestorPlace
Rating:
This article is by InvestorPlace's Jim Woods.
Chipmaker Intel (INTC) did it again.
The tech bellwether handily beat consensus earnings forecasts for both its bottom line and the top line, reporting a third-quarter profit of 33 cents a share on revenue of $9.39 billion. Analysts who cover the stock were expecting a bottom line number of just 28 cents a share on revenue of $9.037 billion.
Of course, with a company like Intel, the forecast for the quarter ahead is of supreme significance -- not just for Intel but for many companies in PC and related sectors. And here we have what could be the real reason to smile, for not only Intel, but for many other companies that use Intel chips in their products.
Intel said that it sees strong consumer demand for PCs and better visibility going into the fourth quarter. The company also forecast fourth-quarter sales of $10.1 billion, give or take $400 million. It put its fourth-quarter gross margin at 62%, plus or minus 3 percentage points.
Shares of Intel were actually halted immediately before and immediately following the earnings announcement, but when the trade embargo was lifted, INTC shares gapped up nearly 6%. Obviously, traders liked what they heard.
I think what the Intel numbers tell us, along with the company’s statements in their conference call, is that consumers are really driving the PC market higher. What the Intel beat also confirms is our latest ChangeWave Alliance Research Network numbers on consumer PC demand.
According to our latest spending survey, spending on laptop computers was up nicely over the past 90 days (although demand for desktop computers remained unchanged from the previous survey).
Companies such as Apple (AAPL), which uses Intel chips in its Mac computers, are benefitting from a big surge in laptop spending since the July survey. We’ve also seen Dell (DELL) laptops benefit from spending on the consumer side.
More importantly for Dell, we’ve seen increased spending plans for laptop and desktop computers on the corporate side in our recent Alliance corporate PC surveys (corporate spending purchases make up approximately 80% of Dell’s revenue).
What this all adds up to is more momentum for Intel going forward, and very likely a continuation of the party on Wall Street the shares have enjoyed over the past six months.
I still think there is room to run for Intel shares, particularly based on what the company said about the fourth quarter and what our Alliance data is telling us about consumer spending. I think Intel is a buy here, and I think we’ll continue seeing nice upside in the stock for the rest of 2009.
Note: At the time of this writing, Jim Woods did not own INTC.
Related Articles:
New ChangeWave Research Shows Restaurant Sector Improving - Starbucks, Chipotle to Benefit
Why Apple Proves That Capitalism Is Great
Blue Chip Stocks at BlueLight Special Prices
