This Day On The Street
Continue to site
ADVERTISEMENT
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

How Intel Can Thrive As PC Sector Lags

Chris Lau, Kapitall: When Intel (INTC) revealed a rise in inventory sitting in its distribution channels, it was a blow for investors still waiting for the PC sector to improve. Intel acknowledged that the Haswell chip refresh will not yield stronger sales in the short term. Not until late August or early September will Intel gain a better sense of its recent sales trends.

[Read more from Kapitall: Ad Mega-Merger - What Publicis Omnicom Group Means for Advertising]

Yet despite the fact that weakness in the PC sector is expected to continue, Intel looks positioned to thrive.

Financial Summary

Inventory grew in Intel’s second quarter. The company attributed the increase to customers beginning to build PCs based on the Haswell processor line-up. Overall, inventories remain well-below historical averages. Intel expects revenue to be at the same level as last year. To adjust for a weaker PC market, Intel is reducing its capital expenditure by $1 billion, to $11 billion. Gross margins are expected to be 59%, as opposed to the prior forecast of 60%.

For the next quarter, Intel forecast revenue would be $13.5 billion, up 5% from last quarter. Gross margins are expected to increase by 3 percent, to 61%.

Haswell in Focus

Intel is diversifying away from traditional PCs, into such devices as ultrabooks. The refresh of chips, including the Haswell, could still improve margins and profits. Intel released quad core products last quarter and this quarter, dual core processors will follow as lower priced products. For now, Intel will not be able to determine if sales will improve, but the chips do offer some innovation for consumers. Devices can now be built without the need for fans to cool the chip. In 2014, the Bay Trail chip will introduce even more innovation – at only 14 nanometers, it will use even less power or produce less heat.

1 of 2

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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG

Markets

DOW 17,776.91 +93.33 0.53%
S&P 500 2,081.34 +12.58 0.61%
NASDAQ 4,997.4590 +5.5190 0.11%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs