Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Intel Q2 Earnings Preview: Sales, Margins Under Pressure As Market Share Slips

By Investing.com (Haris Anwar/Investing.com)Stock MarketsJul 22, 2021 13:42
ph.investing.com/analysis/intel-q2-earnings-preview-sales-margins-under-pressure-as-market-share-slips-83204
Intel Q2 Earnings Preview: Sales, Margins Under Pressure As Market Share Slips
By Investing.com (Haris Anwar/Investing.com)   |  Jul 22, 2021 13:42
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
  • Reports Q2 2021 results on Thursday, July 22, after the market close
  • Revenue Expectation: $17.8 billion
  • EPS Expectation: $1.07

During the past year, for investors in the semiconductor sector, Intel (NASDAQ:INTC) has been a dead investment. At a time when competitors enticed customers with new and faster chips, production setbacks have hurt the largest U.S. chipmaker.

While other chip manufacturers saw their share prices skyrocket over the past 12 months as they benefited from the pandemic-fuelled demand for chips used in cars, laptops and gaming consoles, Intel's stock has barely budged. In fact, it fell more than 9%, while NVIDIA (NASDAQ:NVDA)—one of its largest competitors—gained more than 80% in value.

Intel Weekly Chart.
Intel Weekly Chart.

Given these deep-rooted production problems and the company’s ongoing restructuring, it’s unlikely that the California-based Intel will produce earnings that create excitement among investors.

That trend was obvious when the company released its Q1 earnings in April, reporting a drop in data center revenue and a steep decline in gross profit margins. That was a signal for investors that the company is losing market share to rivals and customers who are designing their own components.

For the quarter that ended June 30, analysts expect sales to decline about 10% from the same period a year ago to $17.8 billion. And the profit per share is predicted to fall to $1.07 from $1.23 a share.

New Foundry Business

While the company's short-term earnings remain under pressure, there are some hopes that Intel’s new Chief Executive Officer Pat Gelsinger will bring a turnaround, helping the semiconductor giant to overcome its production challenges. Gelsinger has put Intel in “investment mode” during a critical period for its return to leadership, and promised he’ll deliver products that are again the best in the industry.

Early this year, Gelsinger unveiled a plan that included creating a new $20-billion foundry business that will manufacture chips for other companies. He also plans to use rivals’ factories to outsource production of other Intel components.

Last week, the Wall Street Journal reported that Intel is exploring a deal to buy GlobalFoundries Inc. to accelerate its plans to make more chips for other tech companies. If that deal goes through, according to the paper, it will be Intel’s largest and could value GlobalFoundries at around $30 billion.

Wall Street analysts, however, are dividend on Intel’s prospects despite the company’s push to remodel its business to become a chip manufacturer for others, a market dominated by Taiwan Semiconductor Manufacturing (NYSE:TSM).

INTC Consensus Estimates
INTC Consensus Estimates

Chart: Investing.com

In a poll of 42 analysts covering the stock by Investing.com, 17 have a buy recommendation, 15 are neutral, while 10 are calling to sell the stock. The consensus price target for the next 12 months indicates an almost 14% upside.

Bottom Line

Intel remains in a bearish spell, hurt by its production missteps and market share loss to competitors. That situation is unlikely to change in the short-run, making its shares suitable for a long-term turnaround bet. In line with that trend, today’s earnings will likely show weakness in both sales and margins.

Intel Q2 Earnings Preview: Sales, Margins Under Pressure As Market Share Slips
 

Related Articles

Intel Q2 Earnings Preview: Sales, Margins Under Pressure As Market Share Slips

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email