Intel Stock Price Hinges on Earnings Guidance for 2015 (INTC)

Nasdaq INTC

5:15 pm. UPDATE: Intel reported earnings of $0.41 a share, in line with expectations. Revenue was $12.8 billion, slightly below forecasts. But the company forecast a 3% increase in revenue for the current quarter based on its improving data center business. The Intel stock price was up 3% in after-hours trading to $32.42.

 

When Intel Corp. (Nasdaq: INTC) reports earnings after the market close today (Tuesday), the company's guidance for 2015 will have the greatest impact on the Intel stock price.

While guidance is always closely watched, it will carry an unusual amount of weight for Intel earnings this time around.

Nasdaq INTCYou see, the Santa Clara, Calif.-based chipmaker withdrew its guidance for the rest of 2015 on March 12, saying it would update its yearly forecast when it released Q1 earnings.

At the same time, Intel lowered its Q1 guidance based on weaker demand for PCs. Intel-made chips power more than 80% of the world's PCs.

INTC warned that Q1 revenue would fall $1 billion below its previous forecast, to $12.8 billion. The double dose of bad news dropped the Intel stock price by nearly 5%, to $30.80.

At this point analysts are pretty sure what to expect from Intel's Q1. But the guidance the company might give for the rest of the year is a real wild card. That means it could cause a dramatic swing in the Intel stock price, both after-hours tonight and in regular trading tomorrow.

Otherwise, here's what to expect from the Q1 Intel earnings:

Q1 Intel Earnings: The Overview

The Numbers: According to Yahoo! Finance, analysts are looking for earnings per share (EPS) of $0.41, up from $0.38 in the same period a year ago. The revenue forecast is for $12.9 billion, up slightly from $12.76 billion a year ago. Remember, that's the figure Intel revised downward in March. Intel did have a strong 2014, however, with revenue up 6% and EPS up 22%.

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The Last Quarter: Intel beat expectations when it reported Q4 earnings in January. EPS of $0.74 was well above the $0.66 Wall Street had forecast. Revenue of $14.72 billion was just a hair higher than expectations for $14.7 billion.

The Intel Stock Price: INTC stock responded to the company's strong performance in 2014, rising 41.76% on the year. But lackluster PC sales reports and the company's own lowered guidance have pushed the Intel stock price down 12.5% so far in 2015.

While 2015 guidance will be the focus, other earnings news could also affect the Intel stock price. Some things to watch:

Earnings News That Could Affect the Intel Stock Price

Intel was most recently in the news because of a rumored deal to buy fellow chipmaker Altera Corp. (Nasdaq: ALTR). But just two weeks after The Wall Street Journal reported the two were in talks, CNBC reported the deal was dead.

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Wall Street liked the deal; buying Altera would bolster Intel through diversification. Now, the lack of a deal leaves Intel looking for a partner. At the top of the list is Altera's main rival, Xilinx Inc. (Nasdaq: XLNX).

While most companies don't like to talk about potential M&A activity during earnings calls, the subject is sure to come up. If Intel at least admits it's still hunting for a partner, it could drive the INTC stock price up.

The numbers themselves could also move the Intel stock price if we get any real surprises.

Everyone already expects weak numbers from the PC business. But the key here is how well Intel's Data Center and Internet of Things groups fare. Those two divisions are where INTC is looking for future growth as the PC business wanes.

Strong growth in these areas might be enough to power an earnings beat and more optimistic headlines.

One more area to watch is mobile. Intel plans to fold its mobile results in with its PC results as of Q1, but has said it will use this week's earnings call to discuss its strategy to improve mobile profitability by $800 million in 2015.

Mobile has been a sore spot for Intel. The mobile chip business lost $4.2 billion in 2014, mostly because Intel had to resort to steep discounts to "buy" market share. That was the price of missing the "mobile revolution" - smartphones and tablets - back in 2007.

Significant progress on the company's quest to transition the mobile business from a money loser to a money maker could also give the Intel stock price a boost.

Intel stock closed at $31.73 Monday.

A Smart Move by Intel: Many veteran tech companies have learned the hard way that success in tech can be all too fleeting. The key to staying successful is adapting to new trends. Intel is doing just that. In fact, Intel is leading the way in a trend that may be its best strategic move yet...

Follow me on Twitter @DavidGZeiler.

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