Will Intel announce its next CEO at its fourth-quarter earnings?
Previously, we saw that Xilinx is set to report strong growth in the December 2018 quarter earnings on the back of strong demand in the data center and communications space. These demand drivers are expected to boost earnings for rival Intel (INTC) as well. Intel is set to report fourth-quarter earnings on January 24.
There are rumors that Intel might announce its next CEO before its earnings. A Bloomberg report citing people familiar with the matter stated that Qualcomm (QCOM) veterans Sanjay Jha and Anand Chandrasekher are no longer in the run to be Intel’s next CEO, leaving Intel’s Navin Shenoy and Murthy Renduchintala on the list of shortlisted candidates. However, the Bloomberg report stated that Intel chair Andy Bryant told some employees that he may choose a “non-traditional” candidate, which means someone outside the company.
By the time earnings are released, Intel will have gone six months without a permanent CEO. During these six months, the demand from the PC and server markets was strong.
Intel’s earnings expectations
Intel had a record year in 2018. It is set to report double-digit revenue growth for the first time in seven years with full-year 2018 revenue expected to rise 13.4% YoY to $71.2 billion. Its fourth-quarter 2018 revenue is expected to grow 11% YoY and fall 1% sequentially to $19 billion. However, it will be difficult for the company to maintain strong growth momentum in 2019 given its high baseline earnings in 2018.
The real challenge for Intel will likely begin in 2019 when competition from Advanced Micro Devices (AMD) picks up and the former loses its process node technology lead to TSMC (TSM) due to 10-nm (nanometer) product delays. AMD is set to launch its 7-nm (nanometer) Ryzen CPUs (central processing units) and EPYC server CPUs in the first half of 2019. The growing competition could allow AMD to take some market share from Intel.
Intel is addressing the above issues by expanding its addressable market to fast-growth areas of 5G (fifth generation), AI (artificial intelligence), and automotive. It is in dire need of a new CEO who can deal with 10-nm delays and strong competition in 2019.
Next, we will look at AMD’s upcoming earnings.
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