Intel Corporation (Nasdaq: INTC) stumbled out of the gate in 2018 after the company disclosed two major security vulnerabilities earlier this month. Intel is reporting its fourth-quarter earnings on Jan. 25, and investors will be watching closely for commentary on the potential long-term implications of the Spectre and Meltdown bugs.
For the fourth quarter, Wall Street analysts are expecting Intel to report earnings per share of 86 cents on gross margins of 62.9 percent and revenue of $16.3 billion. In terms of first-quarter guidance, analysts are estimating Intel will project EPS of 73 cents on gross margins of 62.7 percent and revenue of $15 billion.
Analysts are expecting full-year 2018 EPS and revenue guidance of $3.27 and $63.8 billion, respectively.
Berntein analyst Stacy Rasgon says Intel’s fourth-quarter numbers will likely be solid, but 2018 guidance will be what moves INTC stock.
Rasgon says the fact that Intel CEO Brian Krzanich recently sold roughly half his stock in the company is difficult to spin in a positive light.
“Therefore, while they may continue to buy some time, we believe the structural bear case will become increasingly apparent, especially as attention begins to shift toward 2019,” Rasgon says.
Morgan Stanley analyst Joseph Moore says the good news in the near term for Intel investors is that the security issues won’t push customers to Advanced Micro Devices (AMD) and other competitors.
“The Spectre and Meltdown security exploits have certainly created enthusiasm in both client and server, as the patches have more negative impact on Intel [computers] than AMD, but in a practical sense we don’t see it driving business towards AMD,” Moore says.
Intel initially claimed the vulnerabilities would not have a meaningful financial impact on the company.
Others are optimistic that concerns about Intel are unwarranted. CFRA analyst Angelo Zino says Intel’s fundamentals will likely improve in 2018. “We envision higher cloud investments driving data center growth and we see significant opportunities within the Internet of Things and memory arenas,” Zino says.
Bernstein has…
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