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What to Expect from Intel’s 1Q16 Earnings

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Dec. 4 2020, Updated 10:43 a.m. ET

Intel financial highlights

Intel (INTC), a leader in the semiconductor space, is due to announce its fiscal 1Q16 earnings on April 19, 2016. Fiscal 2015 was an action-packed year for the company. It completed its acquisition of Altera, announced investments in the memory space, and integrated its mobile and computing businesses.

After reporting a slow fiscal 2015, Intel expects 2016 to be a strong year with a slow start. The company has reported weaker guidance for fiscal 1Q16. Seasonal demand for personal computers (or PCs) and weak macroeconomic conditions have hampered semiconductor demand.

In this series, we’ll take a look at Intel’s fiscal 1Q16 and what to expect from the company’s upcoming earnings.

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EPS estimate

For fiscal 1Q16, analysts estimate that Intel will report EPS (earnings per share) of $0.49 compared to its fiscal 4Q15 EPS of $0.74. As seen in the above graph, Intel has topped analysts’ estimates in the past four quarters by an average of 10%. If this trend is maintained, the company is likely to report EPS of $0.54.

Revenue estimate

Analysts expect Intel to report revenue of $14.0 billion compared to the $14.9 billion it reported in fiscal 4Q15. Intel expects its revenue to fall to $14.1 billion in fiscal 1Q16, owing to a further slowdown in PC sales.

Even Micron Technology (MU), Intel’s memory partner, reported a more than 40% revenue fall in the mobile and PC segments in its fiscal 2Q16 earnings for the period ended March 2016.

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Intel’s new organizational structure

Intel has been moving away from PCs toward the data center and IoT (Internet of Things) spaces, but the CCG (Client Computing Group) still commands a major share of 60% of the company’s revenue. To speed up the transition, the company has resorted to mergers and acquisitions.

Intel’s acquisition of Altera was the second-largest acquisition in the semiconductor industry in 2015 after the Avago-Broadcom (AVGO) merger.

Intel also increased its focus in the non-volatile memory solutions market, which is dominated by Samsung (SSNLF). These changes call for a new reporting structure, which will be effective with the company’s fiscal 1Q16 earnings report. We’ll look at the company’s new reporting structure in the next part of the series.

The iShares Russell 1000 ETF (IWD) has exposure to large-capitalization equities across various industries. It has 0.74% exposure to INTC, 0.11% to MU, and 0.18% to AVGO.

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