Earnings Preview: Intel

Intel (INTC) is expected to report Q4 earnings after the market close on Thursday, January 14, with a conference call scheduled for 5:30 pm ET.

Guidance

The consensus estimate is 30c for EPS and $10.16B for revenue, according to First Call. Guidance provided by the company on its last earnings call was for Q4 revenue of $10.1B, +/- $400M. The company guided Q4 gross margin to 62%, +/- 3%. On November 16, Intel's CFO confirmed that Intel was on track to meet that Q4 outlook, and that a recovery in corporate PC spending could happen in the next 18 months. Intel is expected to benefit from renewed spending on technology by corporations in 2010. While Intel is again expected to surpass Wall Street forecasts when it kicks off tech sector earnings this week, analysts worry about a stock sell-off if its 2010 outlook isn't robust enough.

Analyst Views

Calyon expects slight upside to Q4 revenues, but expects Q1 guidance to be "seasonal." The firm is modeling $10.1B in revenue, the midpoint of revenue guidance. Calyon expects gross margins to hit the high end of guidance on a better mix. The firm's Q4 EPS estimate, which includes the Advanced Micro Devices (AMD) settlement related charges, is 29c. Notebook shipments appeared to have tracked better while lower margin netbook shipments were largely inline in Q4. For Q1, Caylon is modelling revenues to decline 8% to $9.3B and modelling EPS of $0.34. Consensus is 34c on $9.31B in revenue. Gross margins for Q1 are modeled at 57%, but Calyon expects 100-200bps upside potential due to continued strength in servers. Caylon believes a corporate PC upgrade cycle is key for further upside to estimates.