Top Line Still Weak At Intel

July 14, 2009 at 1:22 pm  ·  Category: Fundamental Analysis, Macro Economics, Market Commentary, Stocks

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?

intc-1-year-chart

Disclosure: Top Gun has no position in Intel (INTC) shares but is short the QQQQ of which Intel is a component.

Posted by Greg Feirman  ·  Trackback URL  ·  Link
 

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