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Intel Looks Vulnerable

Summary

Intel reports quarterly earnings after-hours today.

Q1 PC sales were off nearly 9%. This could provide more headwinds for the Client Computing Group (58% of revenue).

Revenue growth from DCG slowed to single digits last quarter, which hurt Intel's outlook.

Market chatter suggests Qualcomm could be making inroads with Google - a major DCG client.

Intel looks vulnerable.

Intel CEO Brian Krzanich. Source: ibtimes.com

Intel (NASDAQ:INTC) reports quarterly earnings after-hours on Tuesday. Analysts expect the company to report revenue of $13.86 billion and eps of $0.48. The revenue estimate implies a 7% decline versus results for the quarter-ended December 26, 2015. Investors should focus on the following key items:

How Bad Will PC Decline Weigh This Quarter?

Intel remains the leader in sales of semiconductors for personal computers. It has tried to diversify its revenue stream by selling chips for mobile devices but its mobile ambitions have been a loss leader. The mobile losses were so bad that Intel had to mask them by folding the mobile communications unit within the Client Computing Group ("CCG").

Last quarter revenue from the CCG was up 3% while total revenue also grew 3%. Gross margin ticked up to 64% from 63% in the quarter-ended September 26, 2015; however, it...


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