Intel’s second quarter results reflect improving conditions in the PC market segment.
– Paul Otellini, CEO, Intel
Everybody is gonzo about Intel’s (INTC) second quarter earnings report after today’s close but I just don’t see what’s so great about it.
They beat revenue and earnings estimates of $7.28 billion and 8 cents a share coming in at $8.0 billion in revenue and 18 cents a share – excluding a huge fine by the European Commission. That’s fine but fundamentally the numbers are still pretty weak. Revenue was down 15% and net income 35% from the year ago period. They forecast $8.5 billion in revenue for the third quarter but they earned $10.2 billion in last year’s third quarter.
Even Intel management is talking about a bottom in the 1st quarter and a recovery going forward, but I just don’t see it in the numbers.
Also, it’s worth pointing out that the stock is expensive at current levels. It’s trading up to $18 in the after hours. Back out the $2 in net cash and investments on their balance sheet and it’s a 24 trailing multiple on 68 cents in earnings over the last 4 quarters. Add in the 10 cent upside surprise in today’s report and analysts are looking for 66 cents this fiscal year – also a 24 forward multiple. Where’s the upside from here?
Disclosure: Top Gun has no position in Intel (INTC) shares but is short the QQQQ of which Intel is a component.