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Intel (INTC) To Report Q3 Earnings: What's in the Offing?

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Intel INTC is scheduled to report third-quarter 2021 results on Oct 21, 2021.

For third-quarter 2021, Intel expects non-GAAP revenues of $18.2 billion, indicating 5% growth from the year-ago reported figure.

The Zacks Consensus Estimate for revenues is pegged at $18.22 billion, indicating a decline of 0.6% from the year-ago quarter.

For the third quarter, Intel expects non-GAAP earnings to be $1.10 per share, indicating 2% growth from the year-ago quarter.

Intel Corporation Price and EPS Surprise

Intel Corporation Price and EPS Surprise
Intel Corporation Price and EPS Surprise

Intel Corporation price-eps-surprise | Intel Corporation Quote

The consensus mark for earnings is pegged at $1.11 per share, which has been stable in the past 30 days.

Intel has beaten earnings estimates in each of the trailing four quarters, the average surprise being 20.18%.

Factors Likely To Have Influenced Q3 Results

Coronavirus-induced work-from-home and online-learning waves are expected to have bolstered the sales of processors utilized in enterprise laptops and data center servers. This, in turn, is anticipated to get reflected in third-quarter revenues.

Although PC shipments have shown signs of slowing in the second quarter, strong demand for notebooks is likely to have contributed to Intel’s Client Computing Group (“CCG”) segment revenues. Per IDC data, PC shipments in third-quarter 2021 improved 3.9% year over year to 86.7 million units.

However, industry-wide shortage in components is expected to hurt CCG revenues on a sequential basis. Intel expects supply shortages to persist for several quarters but hurt clients the most in the third quarter.

Robust adoption of Xeon processors, which are integrated with Optane DC Persistent Memory solution, may have contributed to the top line in the quarter to be reported.

Intel’s Optane DC Persistent Memory modules are being leveraged by the likes of Oracle ORCL, SAP, Google, Microsoft MSFT, Baidu and Alibaba.

In the second quarter, the company launched 12 new processors, including the 11th Gen Intel Core with Intel Iris Xe graphics and Intel Xeon W-11000 series processors. Intel also announced a partnership with Microsoft to include its Bridge Technology to deliver better mobile experience on Windows-powered PCs.

Likewise, incremental adoption of Core vPro (11th generation) and Lakefield processors, and Tiger Lake series offerings is likely to get reflected in the to-be-reported quarter’s revenues. Intel shipped more than 50 million units of Tiger Lake in second-quarter 2021.

The launch of third-generation Xeon Ice Lake processors is also expected to have boosted top-line growth for this Zacks Rank #4 (Sell) stock. Intel expects to ship several million units of Alder Lake to customers in the second half of 2021.

Intel’s top line is expected to have benefited from an improving data center business in the to-be-reported quarter.

Mobileye’s new design wins and increasing proliferation of IoT, along with the stabilizing automotive industry, are anticipated to have contributed to Intel’s third-quarter performance. The growing clout of Mobileye’s SuperVision surround-view advanced driver-assistance system in premium electric vehicles bodes well.

Last month, Mobileye unveiled a six-passenger, road-ready electric autonomous vehicle (“AV”) that uses its self-driving system featuring eight EyeQ5 SoCs in the AVKIT58. The AV will be used for commercial driverless ride-hailing services in Tel Aviv and Munich (in collaboration with Sixt SE) starting in 2022.

Growing adoption of cloud-based solutions across mobile compute, along with network infrastructure for 5G, triggered by the momentum in coronavirus-crisis-induced work-from-home wave, has been a key catalyst for growth. Intel’s collaboration with Google cloud is noteworthy in this regard.

Nonetheless, growing competition from Advanced Micro Devices AMD is expected to hurt profitability. Increasing expenses on the accelerated ramp up of 10 nm products and improvement in 7 nm production are anticipated to have hindered first-quarter profitability.

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