Tag Archives: intc

Bullish Views On Apple Supplier Qualcomm Hold As Earnings Await

With a lot of moving parts in play, smartphone chip supplier Qualcomm ( QCOM ) is scheduled to report earnings for its December quarter after the market close Wednesday. The consensus estimate for Qualcomm’s fiscal second quarter is for revenue of $5.34 billion, down 22% year over year and the fourth quarter in a row of revenue deceleration. Analysts polled by Thomson Reuters expect earnings per share minus items of 96 cents, down 31% and also the fourth straight quarter of deceleration. Tough contract negotiations have previously stunted Qualcomm’s licensing revenue growth, along with a royalty dispute with South Korea-based LG. Last year, there were a number of lawsuits globally related to Qualcomm’s licensing business. Investors also are concerned about the under-reporting of device sales among China vendors. The completion of new licensing deals has helped to alleviate those concerns. Qualcomm continues to make notable progress signing China license agreements, says Michael McConnell, an analyst with Pacific Crest Securities, in a research note. Since Qualcomm issued fiscal 2016 guidance, it has inked four of the top five China smartphone OEMs to new license agreements, with Lenovo being the highlight signing, he wrote. McConnell has a buy rating on Qualcomm  stock, and a price target of 63. Qualcom stock is trading near 52 ahead of Wednesday’s open, rising a fraction Tuesday and down 4% for 2016. Samsung Galaxy S7 Helping Qualcomm Credit Suisse analyst Kulbinder Garcha, in a research note, said he does not see the fundamental outlook for Qualcomm’s smartphone business improving. Still, he says improved execution at Qualcomm, a recovery at Samsung, rising revenue diversity and further compliance from Chinese vendors should give a boost to the earnings outlook. He reiterated an outperform rating on Qualcomm stock, with a price target of 67. “While we do see some potential weakness at Apple ( APPL ), i.e. weak shipments and potential share loss to Intel ( INTC ), we believe the early success of the (Samsung) Galaxy S7 indicate that our forecasts are sufficiently conservative,” he wrote. Canaccord Genuity analyst Michael Walkley recently maintained a buy rating on Qualcomm stock and a price target of 65. He wrote that while Intel might take some chip-unit share from Qualcomm for the Apple iPhone 7, Qualcomm will maintain its majority position. “Overall, we are impressed by Qualcomm’s long-term technical roadmap, believe more optimistic long-term technology licensing growth targets are achievable, and appreciate the new focus of the management team to streamline the business and cost controls,” Walkley wrote. Of the 35 analysts that follow Qualcomm, as reported by Thomson Reuters, seven rate the stock a strong buy and 12 a buy. Another 15 have holding ratings, and there is one underperform rating. Intel late Tuesday said it would cut about 11% of its workforce , some 12,000 positions, as it restructures to put less emphasis on the fading PC business and more on rising areas such as the Internet of Things. Despite years of efforts, Intel so far has had minimal success in getting its chips into smartphones and other mobile devices, but many observers say it will likely have chips inside the next Apple iPhone, expected to be released in September.

Intel Will Slash Up To 12,000 Jobs After Q1 Sales Miss On PC Woes

No. 1 chipmaker Intel ( INTC ) lagged Wall Street’s Q1 revenue expectations late Tuesday on PC sales that grew minimally vs. the year-earlier quarter, and announced that up to 12,000 positions would be cut by mid-2017. The 12,000-cut represents 11% of Intel’s global workforce and will require “a combination of voluntary and involuntary departures and a re-evaluation of programs,” according to the press release. Most affected employees will be notified within 60 days. And CFO Stacy Smith will move to a “broader, new role within Intel” leading sales, manufacturing and operations, and reporting directly to CEO Brian Krzanich. Smith will remain in his role pending a formal CFO search, Krzanich said on Intel’s conference call with analysts, after it released results. Intel stock was down more than 2% after hours, having closed down 0.2% during the regular session. Shares are weaker by 8% for the year, having rebounded from a slide in January and mid-February amid reports of weak Taiwanese ODM sales. Krzanich detailed the restructuring in an email to employees, highlighting Intel’s stepping away from PCs to focus on high-growth segments like the data center, Internet of Things and memory which, together, brought in $2.2 billion in revenue growth in 2015. “We are evolving from a PC company to a company that powers billions of smart, connected devices,” Krzanich said on the call. “We do not take these changes lightly. We will be saying goodbye to employees who have played a great role in Intel’s success.” By restructuring, Intel plans to save $750 million in the first year, with an annual run rate savings of $1.4 billion by mid-2017, allowing Intel to “intensify” its investments in its key growth areas. Ultimately, “we expect an even more profitable client computing group (PC),” Krzanich added. PC sales comprised 55% of Intel’s Q1 sales, but have struggled in recent quarters amid stiff tablet and two-in-one competition. Q1 Sales Lag, But EPS Tops For Q1 ended April 2, Intel reported $13.7 billion in sales and 54 cents earnings per share, up 7% and 20%, respectively, vs. the year-earlier quarter. EPS topped analyst expectations by more than a nickel, but sales missed. The consensus of 45 analysts polled by Thomson Reuters modeled $13.83 billion in sales (against Intel’s non-GAAP revenue of $13.8 billion) and 48 cents EPS, in line with Intel’s earlier view for $14 billion in sales, plus or minus $500 million. Nonvolatile memory sales declined 6% vs. the year-earlier quarter, underperforming the struggling PC unit, which managed to climb 2% year over year. Intel’s high-growth units — data center and Internet of Things — grew a respective 9% and 22% year over year. Security sales popped 12% vs. the year-earlier quarter. Krzanich didn’t address recent rumors that Apple ( AAPL ) might tap Intel to supply 30 million-40 million iPhone 7 modems — a development that had sent Intel’s stock jumping. Qualcomm ( QCOM ) typically sources the iPhone modem and would retain the lion’s share of the iPhone 7, analysts say. Analysts largely doubt Intel’s mobile strategy, which hasn’t yet played out. But Krzanich, on the call, defended the mobile unit, which he said “is absolutely continuing to grow for us as a segment, and we’re increasing our profitability.” For the current quarter, Intel guided to $13 billion to $14 billion in sales, which would be up 2% at the midpoint vs. the year-earlier quarter. The company reduced its full-year guidance to mid-single-digit growth. Earlier, Intel saw mid- to high-single-digit growth. Pacific Crest and S&P Global Market Intelligence analysts had expected Intel to cut its full-year guidance on the ebbing PC market, which industry trackers IDC and Gartner recently saw dipping 11.5% and 9.6%, respectively, in Q1 shipments. Days after the forecasts emerged, rumors cropped up that Intel might be prepping to cut thousands of jobs.   Image provided by Shutterstock .    

Goldman Sachs Calls 5G Winners: Verizon, Cisco, Intel, Broadcom

Verizon Communications ( VZ ) and AT&T ( T ) could shake up the U.S. residential broadband market by 2020 by deploying 5G wireless services to homes, challenging cable TV firms Comcast ( CMCSA ) and Charter Communications ( CHTR ), says Goldman Sachs. While 5G is expected to provide much faster data speeds, another market opportunity for AT&T, Verizon and T-Mobile US ( TMUS ) will be applications that require always-on, low-data-rate connections, says Goldman Sachs in a new research report. The apps involve data-gathering from industrial sensors, home appliances and other devices often referred to as part of the Internet of Things. Simona Jankowski, a Goldman Sachs analyst, says that some chipmakers, network gear suppliers and software companies will see an upside in 5G deployment. Jankowski says that Broadcom ( AVGO ), Qualcomm ( QCOM ), Intel ( INTC ), Cisco Systems ( CSCO ), cell tower operator Crown Castle ( CCI ), and bandwidth service provider Zayo Group Holdings ( ZAYO ) could see upside from 5G deployment. “We expect pre-standard 5G commercial deployments to begin in the U.S. in 2017, when AT&T and Verizon plan to be first in the world to roll out fixed wireless 5G broadband to the home, followed by pre-standard 5G mobile networks in Korea in time for the 2018 Olympics,” wrote Jankowski in the report. U.S. regulators are focused on opening up high-frequency airwaves , also called millimeter wave spectrum, for 5G services. “Europe led the 3G transition, with industry giants such as Ericsson ( ERIC ) and Nokia ( NOK ) leading the way,” said Jankowski. “With 4G, the baton passed to the U.S., driven by a new group of industry leaders such as Qualcomm and Apple ( AAPL ). With China, Korea and Japan targeting 5G rollouts on par with or ahead of their Western counterparts, it bears watching whether the wireless industry’s center of gravity shifts once again (to Asia).” The Goldman Sachs analyst says that 5G also could have upside for Cisco, Intel, Zayo and Crown Castle. “We view Cisco’s market leading position in IoT as a strategic differentiator, given that 5G will likely be closely coupled with IoT,”  Jankowski added. “We expect Intel’s server and networking business to benefit from increased data traffic and greater demand for compute-intensive data analytics. “As the largest operator of small cell networks in the U.S. and one of the largest pure-play providers of dark fiber in large metros respectively, Crown Castle and Zayo look well positioned for this long-term investment cycle.”