Intel Earnings Review: First Quarter 2009
Intel (INTC: 20.60 -2.04%) reported their fiscal first quarter 2009 results after the market closed on Tuesday, April 14 that were above Wall Street’s expectations. The company reported EPS of $.11 which exceeded analyst expectations of $.03. Revenue came in at $7.1 billion which was also ahead of the consensus estimate of $7.0 billion.
Key Highlights
The company was able to deliver solid results despite the difficult economic environment. Highlights include:
- Revenues declined 26% y/y to $7.1 billion
- Net income fell 55% to $647 million
- Gross margins fell to 45.6% (down from 53.1% in the fourth quarter)
- Effective tax rate was only 1% (driven primarily by settlement of various federal and state tax matters related to prior years)
- Exited the quarter with $7.8 billion in cash & short term investments
Paul Otellini, Intel president and CEO stated, “Intel has adapted well to the current economic environment and we’re benefiting from disciplined execution and agility. We’re delivering a product portfolio that meets the needs of the changing market, spanning affordable computing to high-performance, energy-efficient computing.”
Earnings Analysis
Not only was Intel able to deliver stellar first quarter results, the company also announced that they believe that PC sales have bottomed out and they expect the industry to return to normal seasonal patterns.
While not providing official guidance, the company did state that they expect revenues to be flat in the second quarter. This would indicate that the declines in annual sales have indeed bottomed and are now heading in the right direction.
Share Performance
Intel’s shares declined 2.4% following their earnings release. Since the beginning of the year, the stock is up over 3% despite the 10% drop in the Dow Jones index.
Recommendation
While Intel’s earnings performance and outlook were clearly very positive, we remain cautious as there is still the potential for this recession to linger into 2010.
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