All Eyes Set on Intel’s Upcoming Fiscal 4Q15 Earnings

Intel’s fiscal 4Q15 performance

Intel (INTC), a leader in the semiconductor market that recently completed its biggest acquisition of Altera, is set to announce its fiscal 4Q15 earnings on January 14, 2015. The company has had the worst year in 2015 due to softening PC (personal computer) sales. In this series, we’ll see what to expect in the company’s fiscal 4Q15 earnings announcement.

All Eyes Set on Intel’s Upcoming Fiscal 4Q15 Earnings

EPS

Analysts expect Intel to report EPS (earnings per share) of $0.63 in fiscal 4Q15, falling 15% YoY (year-over-year) from $0.74 in fiscal 4Q14. For fiscal 2015, analysts expect the company to report EPS of $2.23, or lower than the EPS of 2.31$ in fiscal 2014.

In the last two quarters, Intel topped the analysts’ EPS estimate by $0.05. In fiscal 3Q15, the company reported EPS of $0.64 against the consensus estimate of $0.59. In fiscal 2Q15, the company reported EPS of $0.55 against the estimate of $0.50. If this momentum is maintained, the company may post an EPS of $0.68 in fiscal 4Q15.

Revenue

In Intel’s fiscal 3Q15 earnings, the company stated that it expects to report revenue of $14.8 billion in fiscal 4Q15, or slightly above the $14.7 billion reported in fiscal 4Q14. For fiscal 2015, the company is expected to report a 1% YoY fall in revenue.

However, the company’s nine-month revenue fell 1.7% YoY, indicating that its fiscal 2015 revenue could fall more than 1% YoY.

What’s offsetting revenue?

Intel’s 2015 revenue was plagued by falling revenues from the CCG (client computing group), as it was hit by the slowdown in mobile and PC sales. This trend has had an industry-wide impact, as Intel’s key customer Hewlett-Packard (HPQ) was forced to split due to falling revenues. Even Micron Technology’s (MU) fiscal 2015 revenue fell 1% YoY because of weak PC sales.

Revenue catalysts

Intel has been posting double-digit growth in the Data Center Group, where it dominates with 99% market share. However, Advanced Micro Devices (AMD), Nvidia (NVDA), and IBM are preparing to enter the data center market with ARM-based servers that have enjoyed widespread adoption in the mobile market.

In the next part of the series, we’ll see the stock’s reaction in 2015 and estimated stock price for 2016. You can gain exposure in large cap stocks through the iShares Russell 1000 Value ETF (IWD). It has 1.5% exposure in INTC and 0.20% in HPQ.