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Intel Slides on Light Outlook

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Intel Slides on Light Outlook

Shares of Intel (NASDAQ:INTC) continued to the downside in the after hours session following the company’s third quarter earnings report. Over the last year its been a mixed bag for technology companies. The economic environment has favored software and cloud based names, whereas, hardware names have underperformed the broad technology sector. At first glance Intel’s results look strong with the company beating analyst consensus estimates on the bottom line. However, we need to dig a little deeper this time.

Net income was $2.95 billion, or 58 cents a share, little changed from $2.97, or 58 cents a share, in the third quarter of last year. On the top line the company was able to generate revenues of $13.48 billion, a slight uptick from $13.46 billion a year ago. Analysts had expected the company to report earnings excluding items of 53 cents a share on $13.46 billion in revenue, according to a consensus estimate from Thomson Reuters.

Intel forecast revenue of $13.7 billion, plus or minus $500 million for the fourth quarter. Unfortunately these forecasts came in below the expected results on Wall Street. Analysts are currently expecting the company to generate $14 billion in revenues for the fourth quarter. In a statement following the announcement Chief Executive Officer, Brian Krzanich, said “We’re executing on our strategy to offer an increasingly broad and diverse product portfolio that spans key growth segments, operating systems and form factors. Since August we have introduced more than 40 new products for market segments from the Internet-of-Things to data centers, with an increasing focus on ultra-mobile devices and 2 in 1 systems.”

Shares of the stock traded lower by 2.5% in the extended hours session to $22.81 at the time of this writing. It is likely over the next couple days we see analysts covering the company to adjust their outlook and guidance for the fourth quarter to match company predictions. Thus, downside pressure seems possible for the remainder of the week.

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