Intel Corporation (NASDAQ: INTC), the world's biggest chipmaker, is scheduled to release financial results for fourth quarter on Thursday, January 14, 2010. Analysts, on average, expect the company to report earnings of 30 cents a share on revenue of $10.16 billion. In the year ago quarter, the company reported earnings of 4 cents per share on revenue of $8.23 billion. The company expects to report fourth quarter revenue of $10.1 billion, plus or minus $400 million, and gross margin of 62%, plus or minus 3 percentage points.Intel Corporation designs, manufactures, and sells integrated circuits for computing and communications industries worldwide. It offers microprocessor products used in desktops, nettops, workstations, servers, embedded products, communications products, notebooks, netbooks, mobile Internet devices, and consumer electronics, as well as in embedded designs, such as industrial equipment, point-of-sale systems, panel PCs, automotive information/entertainment systems, and medical equipment. In the third quarter of 2009, Intel accounted for 81.1 percent of global microprocessor revenue, according to market research firm IDC.
In October, the Santa Clara, California-based company reported that its third quarter profit fell 7.5% from last year amid lower revenue and deteriorating margins due to weak demand and lower prices for its chips. Net income dropped to $1.86 billion or $0.33 per share, compared to $2.01 billion, or $0.35 per share, in the prior-year quarter. Revenue declined 8% to $9.39 billion from $10.22 billion in the same quarter last year. Third quarter revenue grew 17% sequentially. Thirty-five analysts had a consensus revenue estimate of $9.04 billion for the third quarter. Gross margin for the third quarter fell to 57.6% from 58.9% a year earlier.
Like most chipmakers, Intel suffered a sharp drop in demand of its products after last year's global financial panic and a severe economic downturn. However, demand for chips improved in the second half of 2009 amid signs of economic stabilization. The release of Microsoft's (NASDAQ: \MSFT) Windows 7 operating system in October, growing demand for consumer electronics and a rebound in corporate orders also boosted chip sales. Global semiconductor sales rose to $22.6 billion in November, up 3.7% from October and up 8.5% year over year, according to the Semiconductor Industry Association. The SIA now predicts that worldwide industry sales will grow 10% in 2010, to $242 billion, and another 8% in 2011, to around $262 billion.
In November, Intel settled all outstanding legal disputes with Advanced Micro Devices Inc. (NYSE: AMD), including anti-trust and patent cross license disputes, with Intel agreeing to pay AMD $1.25 billion. In return, AMD agreed to drop all its regulatory complaints worldwide and all pending litigation, including a case in U.S. District Court in Delaware and two cases in Japan. As a result, Intel raised its fourth quarter spending (R&D plus MG&A) outlook to be approximately $4.2 billion, up from $2.9 billion. The two companies also entered into a new 5-year patent cross license agreement.
Also, in November, New York Attorney General Andrew Cuomo filed a federal antitrust lawsuit against Intel, charging that the maker of computer microprocessors paid billions of dollars in kickbacks and threatened computer manufacturers to prevent the sale of competitors' products. Last month, U.S. consumer watchdog Federal Trade Commission has sued Intel for allegedly using a dominant market position for a decade to stifle competition and to strengthen monopoly. Intel responded that it has competed fairly and lawfully, and the FTC's case is misguided.
In December, the company's plan to launch its first standalone graphics chip suffered a setback after it announced it was delaying indefinitely the release of a graphics chip based on its Larrabee architecture. Early in January, the tech giant unveiled new products at the Consumer Electronics Show in Las Vegas, including new PC chips based on its 32-nanometer technology.
Among other developments, the company raised its quarterly cash dividend by 12.5% during the third quarter. Intel will now pay a dividend of $15.75 per share or $0.63 per share on an annual basis.
The company's stock currently trades at a forward P/E (fye 27-Dec-10) of 13.89 and PEG ratio (5 yr expected) of 2.80. In terms of stock performance, Intel shares have gained 39 percent over the past year.
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