Intel (NASDAQ:INTC) is a perpetual disappointment. The company found a bottom in the $49 - $50 range after the last quarterly earnings miss. In the third quarter report posted on Oct. 22, the stock erased the slow rebound. What happened?
Intel posted data center ("DCG" for Data Center Group) sales falling 7%. Analysts expected revenue of $6.22 billion but Intel came in at $5.9 billion. Still, cloud revenue grew 15%. The unit fell short of expectations due to the unexpected drop in its Enterprise and Government segment.
Intel did not lose much in the way of sales in its PC business. Revenue rose 1% to $9.8 billion. After Dell (NYSE:DELL), Lenovo (OTC:LNVGY), and HP Inc. posted good PC sales, investors should expect Intel growing CPU sales for the next few quarters. Rival Advanced Micro Devices (NASDAQ:AMD) launched Zen 3, which offers better performance at slightly better prices, will still have trouble taking Intel’s market share. AMD’s latest chip costs more than its previous generation. This will give Intel a chance to compete at lower prices.
Outlook
Intel said its 10nm facility is operational. Shipment volume will grow by an impressive 30%. In the fourth quarter, revenue will top $17.4 billion. The operating margin will be 26.5% while EPS will exceed consensus estimates at $1.10.
Trade Intel by buying on the dip and selling in the low $50s, if it gets there.
