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3 Earnings Reports To Watch Tuesday: Yahoo, Intel, UnitedHealth

Yahoo ( YHOO ), Intel ( INTC ) and UnitedHealth ( UNH ) headline another busy day for earnings, though investors may look past headline EPS for all three industry giants. Yahoo Yahoo is expected to report a 53% year-over-year decline in EPS to 7 cents after the market close Tuesday. Revenue likely fell 12% to $1.08 billion, with revenue excluding traffic acquisition costs seen declining even faster. CEO Marissa Mayer has been unable to fuel significant growth since taking the helm in 2012. What investors will want to know is any information on the Yahoo bidding process, with offers due on Monday. Yahoo is entertaining offers for all or part of the Web portal, including its core U.S. operations and its Alibaba ( BABA ) stake. It’s unclear if Yahoo will say anything at all. Various reports said Verizon Communications ( VZ ) and YP Holdings, owned by Cerberus Capital and AT&T ( T ), are among the purported bidders . Yahoo stock rose 1 cent to 36.52 on the stock market today . Shares hit an 8-month high of 37.50 last week. Intel Intel also reports after Tuesday’s closing bell. Analysts expect EPS to rise 15% to 47 cents, with revenue up 8% to $13.83 billion. The key is to what extent data center chips offset weakness for PC chips. Investors will want to know if weak PC sales are continuing in Q2, and whether Intel will cut full-year guidance. Looking ahead, Apple may source 30 million to 40 million iPhone 7 modem chips from Intel, taking share from Qualcomm ( QCOM ), according to Canaccord analyst T. Michael Walkley. Qualcomm, which reports earnings Wednesday evening, will still get most of that business. Apple will release its iPhone 7 later this year. Intel rose 0.6% on Monday, find support just over its 200-day moving average. Qualcomm rose 1%, but remains in a downtrend going back to mid-2014. Apple fell 2.2%, continuing to fall after undercutting its 200-day line. UnitedHealth The No. 1 U.S. health insurer, and the first to report Q1 results, is due out Tuesday morning. Analysts expect an 18% EPS rise to $1.72, with revenue up 23% to $43.96 billion. Investors will looking for industry clues about membership, medical costs. They’ll also want to know more about UnitedHealth’s plans for the ObamaCare exchange. UnitedHealth, which was cautious about entering these marketplaces, has been the most vocal about getting out, perhaps entirely in 2017, due to ongoing losses. UnitedHealth last week announced it was exiting the Arkansas, Georgia and Michigan exchanges. If UnitedHealth drastically scales back its participation, it could reduce competition and boost premiums for enrollees. But if UnitedHealth spurs a stampede of insurers getting out, the impact could be huge. UnitedHealth stock rose to a new high a month ago, moving sideways since then. Shares rose 0.4% to 127.81 on Monday.

Intel Layoff Rumors Circle Amid PC Slump, Data Center Grapple

No. 1 chipmaker Intel ( INTC ) may cut thousands of jobs to buffer its bottom line amid continued PC malaise, according to a report from Oregon Live . The report came as a second analyst in a week cut his price target on Intel stock Sunday in reaction to industry reports of Q1 PC shipment declines and a “dreadful” January for Taiwanese ODMs. Intel is slated to announce its Q1 results late Tuesday. In afternoon trading on the stock market today , Intel stock was up a fraction, trading near 32. Shares dipped severely in January but began to recover by mid-February. As of Friday’s close, Intel stock was down 9% for the year. Summit Research analyst Srini Sundararajan cut his price target on Intel stock to 37 from 38 but reiterated a buy rating. He cited recent reports from industry trackers IDC and Gartner which projected 9.5% and 11.5% year-over-year declines in Q1 PC shipments, respectively. Taiwanese PC makers noted respective 15% and 30% declines in notebook/desktop and motherboard shipments in Q1, Sundararajan wrote in a research report. “We think there will be some effect on Intel in Q1 and Q2 possibly,” he wrote. Pre-announcements from Super Micro Computer ( SMCI ) and Seagate Technology ( STX ) — slated to report earnings April 28 and 29, respectively — show soft demand for the data center and hard disk drive businesses, he wrote. Hard disk drives declined 18% sequentially, Seagate said. That softness will affect Intel, which hangs 60% of its revenue on PC sales. And the data center struggles are particularly concerning. Intel is pushing big into the data center and cloud spaces to diversify from its weakening PC unit. Super Micro Computer guided to $530 million to $533 million in fiscal Q3 sales, well below the midpoint of earlier views for $530 million to $580 million. “Given that a tight correlation exists between Intel’s DCG (data center group) revenues and Super Micro Computer revenues, if we do not see any effect in Q1, we should expect some effect in Q2,” Sundararajan wrote. Intel will likely guide 2016 sales and capital expenditures down, he wrote. Three months ago, Intel modeled mid- to high-single-digit growth for 2016. Sundararajan cut his estimate to $57.1 billion in sales and $2.30 earnings per share, up 3% and down 1%. The consensus models $58.2 billion and $2.36 a share. So far, Intel hasn’t officially announced layoffs internally, according to the Oregon Live report that cited inside sources. The cutbacks could reduce employment in some units by double-digit percentages.

Intel Expected To Swipe 30-40 Million Apple iPhone 7s From Qualcomm

Apple ( AAPL ) will tap No. 1 chipmaker Intel ( INTC ) to source 30-40 million iPhone 7 modems, but rival Qualcomm ( QCOM ) will remain top dog, Canaccord analyst T. Michael Walkley predicts. Meanwhile, Qualcomm’s Chinese-licensing recovery is under way despite a $100 million quarterly dispute with South Korean LG, he wrote in a research report. Walkley reiterated his buy rating and 65 price target on Qualcomm stock. For fiscal Q2 ended March 27, the consensus of 35 analysts polled by Thomson Reuters expect Qualcomm to report 96 cents EPS minus items on $5.34 billion in sales, down 33% and 23%, respectively, vs. the year-earlier quarter. Three months ago, Qualcomm guided to $4.9 billion to $5.7 billion in sales and 90 cents to $1 EPS ex items. Then, Qualcomm outlined its improving Chinese negotiations which included four re-signed government-approved contracts. “With the recently signed Lenovo deal, we believe Qualcomm now has the top four Chinese (smartphone makers) licensed for 3-mode and all 3G/4G devices,” Walkley wrote in a research report. He expects licensing sales to buoy in the latter half of 2016. Licensing sales toppled 20% sequentially back in fiscal Q3, ended last June 28, to just short of $2 billion amid the negotiations. Since then, the unit has seen 7%-8% sequential declines. No more, Credit Suisse analyst Kulbinder Garcha says. For Q2, Garcha expects $2.2 billion in licensing sales, up 36% sequentially and down 10% vs. the year-earlier quarter. He expects $7.5 billion in total 2016 licensing revenue growing to $7.6 billion in 2017. But Qualcomm’s chip sales could get snagged in headwinds, Garcha says. Qualcomm quintupled its content in the Samsung Galaxy S7 , teardowns show, but it will likely lose some iPhone 7 share to Intel even as Apple shipments lag. Garcha retained his outperform rating and 67 price target on Qualcomm stock, which is trading near 51, up about 3 percent in 2016.