Intel Reports Second-Quarter 2018 Financial Results（data center business falls short, shares slip）

[csbin]

https://newsroom.intel.com/news-releases/intel-reports-second-quarter-2018-financial-results/

https://finance.yahoo.com/news/intels-data-center-business-misses-202025519.html?guccounter=1


July 26 (Reuters) - Intel Corp's fast-growing data center business missed Wall Street targets on Thursday as the world's second-largest chipmaker faced stiff rivalry from Advanced Micro Devices Inc, and again delayed the release of its next-generation chips until the end of 2019.

The company's shares fell almost 6 percent in extended trading.

Sales to data centers that power mobile and web apps, which bring more profit than chips for personal computers, rose 26.9 percent to $5.55 billion in the second quarter ended June 30. Analysts had expected revenue of $5.63 billion, according to financial and data analytics firm FactSet.

Intel has been increasingly catering to data centers as revenue from PCs has flattened since shipments peaked in 2011.

AMD, which has been gaining ground with its new server chips, beat estimates for quarterly profit and revenue on Wednesday, powered by its EPYC server processors.

Intel expects that PCs with its next-generation 10nm chips will be for sale during the holiday season of 2019, company spokeswoman Cara Walker said by email. On a conference call with investors, Murthy Renduchintala, Intel's chip architecture chief, said 10nm data center chips will be released "shortly after" the consumer PC chips.

Last quarter, the company said the 10nm chips were being pushed from 2018 to 2019 but did not specify when. Intel originally predicted the chips could be ready by 2015.

The compares to rival Taiwan Semiconductor Manufacturing Co Ltd expecting 7nm chips to contribute more than 20 percent to its revenue next year.

Intel's net income rose to $5.01 billion, or $1.05 per share, from $2.81 billion, or 58 cents per share, in the year-ago quarter. https://bit.ly/2mLLApb

Excluding items, the company earned $1.04 per share, beating expectations of 96 cents per share, according to Thomson Reuters I/B/E/S.

The company benefited from a stabilizing PC market, in which worldwide shipments grew for the first time in six years, according to research firm Gartner.

Revenue in Intel's client computing business, which caters to PC makers and is still the biggest contributor to sales, rose 6.3 percent to $8.73 billion, beating FactSet estimates of $8.48 billion.

Intel forecast current-quarter revenue of $18.1 billion, plus or minus $500 million, and adjusted earnings of $1.15 per share, plus or minus 5 cents. Analysts on average had expected revenue of $17.60 billion on a profit of $1.08 per share, according to Thomson Reuters I/B/E/S.

Net revenue rose 14.9 percent to $16.96 billion, above estimates of $16.77 billion.

The company is searching for a new chief executive after Brian Krzanich was ousted last month following an investigation that found he had a consensual relationship with an employee in breach of company policy.

Chief Financial Officer Robert Swan is acting as interim CEO.

Shares of the Santa Clara, California-based chipmaker which have gained 13 percent so far this year, fell 5.6 percent to $49.28 after the bell.

 

[VirtualLarry]

The company benefited from a stabilizing PC market, in which worldwide shipments grew for the first time in six years, according to research firm Gartner.

Well, that's some bright news. Too bad about Intel's datacenter business. LOL.

 

[Qwertilot]

The one that 'only' grew 26% or so? How utterly tragic.

 

[NTMBK]

Data centre grew plenty, it just didn't grow quite as much as predicted.

 

[frozentundra123456]

Data centre grew plenty, it just didn't grow quite as much as predicted.

Yea, actually, I thought the results overall were quite good. Surprised the stock dropped so much. Despite what the analysts say, I think the stock is overpriced though, and was just waiting for a reason to drop.

 

[Hitman928]

I think a big part of the reason why the stock dropped was the clarification of 10 nm availability. Despite earnings outlook for the next quarter, intel announced that products with 10 nm chips wouldn't be on shelves until the end of 2019. Before, intel just said some time in 2019 but they've now pushed it to the end of the year. Additionally, they said that server chips would follow "soon". Knowing the extra time it takes to validate the server chips for actual server vendors, this potentially gives AMD a big lead time to have 7nm EPYC in the market before intel can respond.

So yeah, this quarter was good results and next quarter had good guidance, but I think the stock took a hit on the fear that on a little more long term perspective, intel isn't looking as good on the competitive landscape due to continuing 10 nm troubles.

 

[coercitiv]

I think a big part of the reason why the stock dropped was the clarification of 10 nm availability. Despite earnings outlook for the next quarter, intel announced that products with 10 nm chips wouldn't be on shelves until the end of 2019. Before, intel just said some time in 2019 but they've now pushed it to the end of the year.Knowing the extra time it takes to validate the server chips for actual server vendors, this potentially gives AMD a big lead time to have 7nm EPYC in the market before intel can respond.

Bingo!

 

[pj-]

I bought a little AMD stock a few weeks ago because of the general tone of this subforum. Nothing I couldn't afford to lose of course, but now I wish I had bought a bit more.

 

[moinmoin]

I bought a little AMD stock a few weeks ago because of the general tone of this subforum. Nothing I couldn't afford to lose of course, but now I wish I had bought a bit more.

While I don't disagree on an AMD buy at least until Intel's process node roadmap clears up I sure hope you don't usually make your stock decisions based on forum banters.

 

[maddie]

While I don't disagree on an AMD buy at least until Intel's process node roadmap clears up I sure hope you don't usually make your stock decisions based on forum banters.

The so called professional stock analysts available to the general public are almost always late to the feast. We see this repeatedly. These forums can have a lot of great speculation by very knowledgeable individuals who can give an accurate view of the future. Witness Ryzen and AMD's stock from when the early CPU architecture started becoming known and the huge delay before mainstream analysts began recommending the stock, or Intel and the 10nm fiasco affecting competitive ability vis-a-vis AMD, or the rise of Crypto, or the crushing avalanche of Nvidia, or - or - or.

By the time you get investing advice from the mainstream, the rally is often over. I sometimes wonder if this is by design to suck in the poor average investor to give a final lift.

 

[PeterScott]

I think a big part of the reason why the stock dropped was the clarification of 10 nm availability. Despite earnings outlook for the next quarter, intel announced that products with 10 nm chips wouldn't be on shelves until the end of 2019. Before, intel just said some time in 2019 but they've now pushed it to the end of the year. Additionally, they said that server chips would follow "soon". Knowing the extra time it takes to validate the server chips for actual server vendors, this potentially gives AMD a big lead time to have 7nm EPYC in the market before intel can respond.

So yeah, this quarter was good results and next quarter had good guidance, but I think the stock took a hit on the fear that on a little more long term perspective, intel isn't looking as good on the competitive landscape due to continuing 10 nm troubles.

The forward looking items are usually the most important to any stocks pricing.

But it is amazing how well Intel has done in recent years, with backdrop of a stalled (or even declining) PC industry, and AMDs CPU resurgence with Ryzen, Intel still keeps churning out record quarters.

People shouldn't underestimate the impact of market inertia. It's what I often point out, when people over reacts to some company having 6-12 month lead in a product, like the market will instantly invert (Like when Ryzen Launched and Intel was doomed!).

But of course, eventually newer, and better products will start to swing that inertia in the other direction. Definitely interesting times in the CPU industry.

 

[ZippZ]

I wonder what happens if Intel misses their 10nm target again, pushing things back into 2020/2021? How long does it take them to validate a process before mass producing processors? Basically I'm wondering if Intel has a fix now, or if they're just stalling for time.

 

[pj-]

While I don't disagree on an AMD buy at least until Intel's process node roadmap clears up I sure hope you don't usually make your stock decisions based on forum banters.

It was only a couple hundred bucks that probably would have ended up going into craft beer or some other stupid thing.

I don't think I'd ever consider individual stock trading as anything other than gambling for fun. Having said that, I was reasonably confident that I wouldn't lose money on AMD based on all the stuff I've read here and a few other places.

The so called professional stock analysts available to the general public are almost always late to the feast. We see this repeatedly. These forums can have a lot of great speculation by very knowledgeable individuals who can give an accurate view of the future. Witness Ryzen and AMD's stock from when the early CPU architecture started becoming known and the huge delay before mainstream analysts began recommending the stock, or Intel and the 10nm fiasco affecting competitive ability vis-a-vis AMD, or the rise of Crypto, or the crushing avalanche of Nvidia, or - or - or.

By the time you get investing advice from the mainstream, the rally is often over. I sometimes wonder if this is by design to suck in the poor average investor to give a final lift.

I work in a position that is tangentially related to finance, so CNBC is played on TV all day at my job. The superficiality of their discussion on a lot of topics is part of what lead me to believe the info I was seeing here was not fully reflected in the market.

 

[maddie]

I wonder what happens if Intel misses their 10nm target again, pushing things back into 2020/2021? How long does it take them to validate a process before mass producing processors? Basically I'm wondering if Intel has a fix now, or if they're just stalling for time.

That is literally the Billion $ question.

 

[jpiniero]

I wonder what happens if Intel misses their 10nm target again, pushing things back into 2020/2021?

This almost has to be it. If they miss this target, it's cancellation time. Kind of getting at the point where if Intel still has any doubts about 10nm they need to either seriously accelerate 7nm or start thinking about calling TSMC.

 

[happy medium]

Funny when you read posts on this forum you would think Intel is in trouble and bleeding money.

Meanwhile they are making 50 billion a year.

 

[Markfw]

Funny when you read posts on this forum you would think Intel is in trouble and bleeding money.

Meanwhile they are making 50 billion a year.

Well, their stockholders think they are in trouble, and they are loosing marketshare in servers to AMD. The money is very temporary, but can change overnight. Look at facebook.

Oh, and its currently 5 billion a quarter, or 20 billion, not 50 billion, stop exaggerating. And again, that can change rapidly.

 

[happy medium]

Well, their stockholders think they are in trouble, and they are loosing marketshare in servers to AMD. The money is very temporary, but can change overnight. Look at facebook.

Oh, and its currently 5 billion a quarter, or 20 billion, not 50 billion, stop exaggerating. And again, that can change rapidly.[/QUOte

.

I think post makes my point.
More exaggerated guessing and fud spreading.

 

[Markfw]

So you are saying that AMD is NOT eating into their server market share like the OP says ? And I am guessing at the fact the stock dropped significantly today ? (8.59%)

What drugs are you on, let me have some.

And here is a quote from cnbc
"
Intel plunges on product delays and fears it's losing a near 'monopolistic position'

• Shares of Intel dropped more than 8 percent on Friday on fears of stiffening competition and product delays.
• Although the chipmaker beat earnings expectations on Thursday, analysts expressed concern that rivals such as AMD will eat away at its dominant market share.
• Aside from external competition, Intel has been struggling to maintain production timeline goals on its next-generation chips.

"

So me, and many on this forum and cnbc are all "exaggerated guessing and fud spreading."

Source: https://www.cnbc.com/2018/07/27/intel-plunges-on-competition-concerns-product-delays.html

 

[VirtualLarry]

The writing is on the wall, unless Intel can get back to "its old self", and actually being more of an engineering company, rather than a lackluster but cut-throat marketing machine, and start hitting their timelines for product development and introduction, then, they're going to go down. I think that we're seeing the giant 800lb chip-gorilla stumble like a drunk sailor. 10nm is no-where to be found (yet), they just released what, the third rehash of an identical architecture, and soon a forth...

....all the while, AMD came out with a new Zen architecture, and they are actually executing well on their product portfolio.

Not to mention, Intel played fast and loose with their architecture security restrictions, to gain performance in the P4 era, and those design decisions have stuck by them, sadly, leaving them open to Meltdown and Spectre, two of the worse general-purpose hardware exploits that I've seen in quite a long, long time.

Meanwhile, AMD is largely immune, by design.

But the true believers of Intel won't see these things.

 

[gorobei]

how is 10nm availability being pushed back to late 2019 not the bigger headline? a 4 year delay is hardly a good sign.
http://www.bit-tech.net/news/tech/cpus/intel-pushes-10nm-back-to-late-2019/1/

 

[UsandThem]

While I don't share the same "doom and gloom" for Intel that some others do, I will say that if they miss (or strikeout) on their next gen chip, and AMD delivers with Zen 2, they will be weakened. They have a lot of smart people working for them, and they are capable of delivering a "Sandy Bridge 2.0" chip. Intel just got complacent with no true competition for such a long period, which happens to a lot of companies. Sears, GE, 3Dfx, Blockbuster, WorldCom, Kodak etc. Even huge companies aren't immune to failing if they lose their focus, and have bad management.

Now they are at a very important point in their company's history. Even if their next gen chip is underwhelming, they will still be fine as a company, but they will continue to lose market share. And they are having to do this without a permanent CEO right now, and with their 10nm way behind schedule.

It ought to be interesting how the CPU market plays out over the next few years, and it gives everyone something to argue talk about. Because let's be honest, until Ryzen launched and we found out it was a great competitive CPU, AMD had a very rough 10 years. AMD was way behind Intel after they launched their Core CPUs, and never got remotely close again until Ryzen hit.

True competition is a good thing for consumers, so I don't understand why anyone would want Intel or AMD to fail, or be non-competitive.

 

[PeterScott]

So you are saying that AMD is NOT eating into their server market share like the OP says ? And I am guessing at the fact the stock dropped significantly today ? (8.59%)

What drugs are you on, let me have some.

And here is a quote from cnbc
"
Intel plunges on product delays and fears it's losing a near 'monopolistic position'

• Shares of Intel dropped more than 8 percent on Friday on fears of stiffening competition and product delays.
• Although the chipmaker beat earnings expectations on Thursday, analysts expressed concern that rivals such as AMD will eat away at its dominant market share.
• Aside from external competition, Intel has been struggling to maintain production timeline goals on its next-generation chips.

"

So me, and many on this forum and cnbc are all "exaggerated guessing and fud spreading."

Source: https://www.cnbc.com/2018/07/27/intel-plunges-on-competition-concerns-product-delays.html

When you dredge up the most negative headline you can find, post it in a large bold font. It definitely looks like FUD spreading to me.

We have been seeing the "Intel is Doomed FUD" every since Ryzen launched. Yet if you actually looked at Intel's sales, you would be hard pressed to see anywhere they have been significantly affected.

I think it is definitely over reaction to read daily stock market fluctuations, as anything meaningful. If it goes back up are you going to alter your opinion?

Will Intel lose market share to AMD in servers. Obviously, but since it is expected to retain about 90-95% of the x86 server market for the next year, and since it is growing fast, it is almost irrelevant to Intel's bottom line.

 

[beginner99]

The so called professional stock analysts available to the general public are almost always late to the feast. We see this repeatedly. These forums can have a lot of great speculation by very knowledgeable individuals who can give an accurate view of the future. Witness Ryzen and AMD's stock from when the early CPU architecture started becoming known and the huge delay before mainstream analysts began recommending the stock, or Intel and the 10nm fiasco affecting competitive ability vis-a-vis AMD, or the rise of Crypto, or the crushing avalanche of Nvidia, or - or - or.

By the time you get investing advice from the mainstream, the rally is often over. I sometimes wonder if this is by design to suck in the poor average investor to give a final lift.

Fully agree. First read here about ARM many years ago, and sock has been going up since then. First read about Ethereum here when it was below $10 and well we all know how that went.
Of course then using google to inform yourself, verify and use your own critical thinking skill still applies. As Warren Buffets says. Never invest in what you don't understand. ARM was easy to understand. Crypto is more difficult but with Ethereum if it takes of current prices will soar another 10-100x.

 

[moinmoin]

Yet if you actually looked at Intel's sales, you would be hard pressed to see anywhere they have been significantly affected.

Not that I disagree with your overall post, but this particular viewpoint is exactly one that Intel should be very wary of. There are plenty examples of businesses enjoying record numbers and dominant market shares while failing to adapt to already growing new competition. A huge one such is Nokia that actually had its best financial numbers and the biggest market share for the couple years after iPhone launched and smartphones in general arrived.