This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Intel Tarnishes Turnaround Story

He points to Intel's 51% target for full-year gross margins. Because Intel left that target unchanged Tuesday, the company has effectively indicated that it will make up for the second-quarter's margin shortfall in the last two quarters of the year.

"They are putting pressure on themselves," says Gorman. "But they're smart enough not to do that unless they thought they could do it," he says, citing the company's improvements in its manufacturing and the improving inventory levels.

The second half of the year is a strong time for PC sales, thanks to the back-to-school and Christmas shopping seasons. And Intel management affirmed Tuesday that the PC market this year appears to be in good shape.

Several financial analysts raised their estimates on similar logic.

Stifel Nicolaus analyst Cody Acree bumped up his estimate for Intel's full-year EPS from $1.07 to $1.13.

"Through the second half, we believe strong unit volumes, likely derived from market share gains, will combine with higher production yields and lean supplies resulting in a more rapid than projected gross margin increase," Acree wrote in a note to investors Wednesday.

"Ultimately we believe this gross margin upside will be the catalyst for further material share appreciation," wrote Acree. Stifel Nicolaus makes a market in Intel shares and has provided Intel with non-investment-banking services in the last 12 months.

The big wild card, of course, is pricing. And Intel confessed that price erosion was a bit more aggressive than it expected in the second quarter and that the company expects the trend to continue for the rest of the year.

That's a tough environment in which to raise gross margins, and in fact, it accounts for much of Intel's recent drop in profitability.

Intel has adapted impressively to the new forces shaping its market. The question now may be whether investors have accepted the new Intel.
3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AMD $3.55 0.00%
INTC $30.28 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs