Intel surges 8% on an earnings beat and better-than-expected forecast

IntelIntel CEO Bob Swan

Shares of Intel gained as much as 8% in early trading Friday following the company’s fiscal fourth-quarter and full-year 2019 earnings report on Thursday.

The company handily beat Wall Street expectations, gave a rosy outlook for its first-quarter 2020 earnings report, and announced a 5% increase to its quarterly cash dividend.

Here’s what the company reported versus what analysts by surveyed Bloomberg expected:

  • Adjusted earnings per share: $US1.52 reported versus $US1.25 (expected)
  • Revenue: $US20.21 billion reported, versus $US19.22 billion (expected)

Intel’s record revenue growth in the quarter was led by its data centre group, which grew 19% year over year driven by increased demand in cloud service. The company’s PC-centric revenue was up 2% year over year.

“One year into our long-term financial plan, we have outperformed our revenue and EPS expectations,” said Bob Swan, Intel’s CEO, in a press release.

He continued: “Looking ahead, we are investing to win the technology inflections of the future, play a bigger role in the success of our customers and increase shareholder returns.”

Intel, the largest maker of server chips, announced in the fourth quarter the $US2 billion acquisition of Habana Labs, an artificial intelligence chip company. In addition, Intel completed in the fourth quarter a sale of most of its smartphone modem business to Apple – a move that generated $US16.9 billion in free cash flow and returned 113% to shareholders in 2019, according to an earnings presentation.

Going forward, the company forecasts non-GAAP first-quarter earnings of $US1.30 per share and revenue of $US19 billion, higher than Wall Street analysts had expected. Intel also forecasts that for the full year 2020 it will generate non-GAAP earnings of $US5 per share and approximately $US73.5 billion in revenue, higher than consensus estimates.

Intel’s data centre business is benefiting from a rush to build up facilities like those operated by Google Cloud, Facebook, and Amazon’s AWS. On a call with analysts Thursday, Swan said the company anticipates that the data centre business will see growth in the high single digits in 2020.

Intel gained 6% year to date through Thursday’s close.

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