Expect the earnings rally to continue tomorrow. Intel reported a blow-out quarter after hours. The company, which always sandbags, reported better than expected EPS of 51 cents (43 cent estimates) on revenues of $10.8B ($10.25B estimates). More importantly, however, they are raising guidance and expect capex to increase substantially in the coming quarters. The market will certainly love this news, however, it is important to note that Intel has a tendency to sandbag estimates and generally beats. The previous blowout quarter coincided with a near market top. Via Business Wire:
“Strong demand from corporate customers for our most advanced microprocessors helped Intel achieve the best quarter in the company’s 42-year history,” said Paul Otellini, Intel president and CEO. “Our process technology lead plus compelling architectural designs increasingly differentiate Intel-based products in the marketplace. The PC and server segments are healthy and the demand for leading-edge technology will continue to increase for the foreseeable future.”
- Spending (R&D plus MG&A): $12.7 billion, plus or minus $100 million. The company’s prior expectation was $12.4 billion, plus or minus $100 million.
- R&D spending: Approximately $6.6 billion. The company’s prior expectation was approximately $6.4 billion.
- Capital spending: $5.2 billion, plus or minus $200 million. The company’s prior expectation was $4.8 billion, plus or minus $100 million.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.