INTC Preview: Any Impact From Meltdown?

Intel (INTC - commentary - Cramer's Take) is scheduled to report its third-quarter results after the close tomorrow and will host a conference call at 5:30 p.m. EDT. Current consensus estimates are for revenue of $10.27 billion (up 2% year over year and 8% quarter over quarter) and EPS of 34 cents.

In the prior quarter, revenue was $9.47 billion (up 11% year over year and 6% quarter over quarter), and GAAP EPS were 28 cents. The gross margin was 55.4%, up 850 basis points year over year and 160 basis points quarter over quarter, due to lower costs and higher volumes. The operating margin was 23.8%, up 820 basis points from last year and 250 basis points sequentially, driven by the increased revenue.

Cash from operations was $2.8 billion, an increase of about $400 million from the prior year. The cash balance declined by about $1.7 billion in the quarter, up after the repurchase of $2.5 billion in stock. Accounts receivable decreased about $300 million, with days sales outstanding dropping two days, to 23 days. Inventory was essentially flat, but days of inventory increased four days, to 70 days.

Microprocessor revenue was $6.85 billion, up 14% year over year but down 2% quarter over quarter. Server units hit record channel shipments levels with very strong demand from the small-medium business market. Notebook units were also at record levels. All geographies were up on a year-over-year basis and were better than seasonal. Demand was characterized as "healthy," but the company continues to watch macro-level issues closely.

The guidance for the September quarter expected revenue to be in the $10.0 billion to $10.6 billion range (down 1% to up 5% year over year). The gross margin was expected to be 58% (give or take 2 points), with operating expenses of about $2.9 billion. Throw in about $60 million of restructuring expense and another $30 million of "other" expense along with a 33% tax rate, and you come out with EPS in the 34 cents to 35 cents neighborhood.

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At the time of publication, Faulkner had no positions in the stocks mentioned.

Bob Faulkner has been in the investment business for 18 years with an exclusive focus on technology stocks. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Faulkner appreciates your feedback; click here to send him an email.

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