2Q15 earnings review
On July 15, 2015, Intel (INTC)—a leader in the semiconductor space—reported its fiscal 2Q15 results. The company posted revenue and non-GAAP (generally accepted accounting principles) EPS (earnings per share) of $13.2 billion and $0.55, respectively.
Intel’s revenue and EPS marginally exceeded Thomson Reuters analysts’ expectations. Analysts expected Intel to post $13.04 billion and $0.50 in revenue and EPS, respectively, in 2Q15. As a result, Intel’s stock rose by ~5% after the results were announced on July 15, 2015. On a YoY (year-over-year) basis, Intel’s revenue fell by 4.60% while its EPS remained flat.
For 2Q15, the operating income and net income stood at $2.9 billion and $2.7 billion, respectively. On a YoY basis, the net income fell by 3%.
Operating segment performance
The above chart shows the 2Q15 contributions of various operating segments towards Intel’s consolidated revenue. The CCG (Client Computing Group) segment continued to be a dominant operating segment for Intel. It contributed ~57% to the overall revenue. It’s followed by the DCG (Data Center Group) segment.
The company’s CCG revenue stood at $7.5 billion—a fall of 13.50% on a YoY basis. However, on a sequential basis, it grew by 2%. DCG and IoT (Internet of Things) revenue registered 10% and 4% YoY growth in 2Q15. In 2Q15, Software and Services’ revenue fell by 2.50% on a YoY basis, while the “other” segment grew 38% on a YoY basis.
Since Intel generates the majority of its revenue from the PC market, the fall in PC shipments impacted the growth of almost all of its operating segments, especially the CCG segment. Its peers in the semiconductor space—AMD (AMD) and Micron Technology (MU)—also blamed the PC market for their recent poor financial performance. QLogic (QLGC)—a server and storage component manufacturer, whose clients include Hewlett-Packard (HPQ) and Cisco (CSCO)—also reduced its guidance for 1Q15 on July 10, 2015. The quarter ended in June 2015.
If you’re bullish on Intel, you can consider investing in the VanEck Vectors Semiconductor ETF (SMH), and the Technology Select Sector SPDR Fund (XLK). Intel accounts for about 19% and 3.55% of SMH and XLK, respectively.