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Intel Earnings: What Wall Street Is Saying

NEW YORK ( TheStreet) -- Intel (INTC - Get Report) managed to beat Wall Street estimates for the third quarter, as it appears the PC market is bottoming out. There are still concerns, however, causing Intel to keep fourth-quarter guidance conservative.

The world's largest chipmaker earned 58 cents a share on $13.5 billion in revenue. Analysts polled by Thomson Reuters were looking for earnings of 53 cents a share on $13.46 billion in sales. Gross margins for the quarter were 62.4%, better than the 61% midpoint of Intel's previous guidance.

Revenue from the PC Client Group, Intel's largest, continued to fall year over year, down 3.5% to $8.4 billion. But it was up 3.5% sequentially, a bright spot for an otherwise pretty dismal industry.

Even though revenue from the PC sector appears to be on the rebound, Intel was cautious in its guidance for the next quarter. For the fourth quarter, Intel said it expects revenue at $13.7 billion, plus or minus $500 million, with gross margins between 59% and 63%. Analysts predict fourth-quarter revenue of $14 billion.

Following the results, here's what several analysts on Wall Street had to say about Intel's quarter:

UBS analyst Stephen Chin (Neutral, $24 PT)

"Intel guided 4Q13 sales and gross margin to $13.7bn (which is slightly below consensus at $14.1bn) and 61% and we estimate its PC chip sales are down q/q by -8% q/q and server chip sales up +16% q/q. Intel believes PC demand in mature markets (U.S. and Western Europe) have bottomed and momentum in new 2-in-1 PCs using its Haswell chip priced sub-$349 and new BayTrail chips priced sub-$299 will be a key driver for the stock in 2014 where we still lack conviction."

BMO Capital Markets analyst Ambrish Srivastava (Market Perform, $21 PT)

"Our estimates go up slightly. For 2013, our EPS goes up largely due to higher GM and lower tax rate, partly offset by lower revenues. For 2013, EPS goes to $1.89 from $1.86. For 2014, our estimates are up largely due to higher GM and a lower tax rate, partly offset by lower revenues. Our 2014 EPS goes to $1.91 from $1.87. INTC is trading at a P/E multiple of 12x our 2014 EPS estimate. We continue to rate INTC shares Market Perform. We like the valuation, but struggle to see a sustained fundamental tailwind to recommend overweighting the stock."

Credit Suisse analyst John Pitzer (Outperform, $30 PT)

"INTC reported IN-LINE C3Q revenue and BETTER C3Q EPS on GM upside and guided C4Q revenue/EPS BELOW Street consensus but BETTER than previewed. While DCG showed accelerating y/y growth in C3Q (0.3% in C2Q, 12.2% in C3Q and 15-20% expected in C4Q), it was BELOW our expectations of 18.8% y/y growth. C4Q guidance threaded the needle of being good enough (PCCG down q/q but DCG up q/q) but not too good as to embolden the Bears; unfortunately, C4Q guidance did nothing to change the debate, and admittedly, the Broadwell 1-quarter push-out is a bit confusing."

Deutsche Bank analyst Ross Seymore (Buy, $26 PT)

"INTC delivered slightly better 3Q results, but guided 4Q revs below DBe/Street and at the very low end of avg seasonality. Despite some positive trends in Enterprise/mature mkts leading to DCG being above seasonal in 4Q, volatile Consumer/EM demand led to a cautious guide. While this muted growth remains somewhat disappointing, we note that INTC's profitability has remained solid as illustrated by its 2013 GM remaining at 60%, in-line with its original outlook despite its CY revs being ~$2b below plan."

Shares of Intel were slightly lower in premarket trading Wednesday, off 0.3% to $23.32.

-- Written by Chris Ciaccia in New York

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