Yesterday Intel held its 10/18 earnings call. Currently the stock is down by over 6%.
The TechEnablement Analysis for the stock decrease is twofold:
- The decrease in enterprise revenue of 3% rather than staying flat impacted INTC as it drew down DCG revenue growth this year to single digits. The executive team downplayed the enterprise revenue decrease by pointing out (1) this reflects a migration to cloud and (2) all other areas in the DCG exceeded expectations including Intel(R) Omni-Path (Intel OPA) and Intel Xeon Phi. The expectation is also that silicon photonics (on-chip OPA) and Intel Xeon Phi begin ramping up this year – the assumption is that this will increase revenue and market penetration.
- Not mentioned in some sell side commentary is the bump from $700M to $2.3B for restructuring charges for retirement and severance, which will be realized between now and middle of 2017. This certainly had an impact. There’s opinions out there that INTC was very surprised by how many took early retirement. It has caused a fair amount of inefficiency since August and the loss of a number of strategic and senior technical people.
The earnings call transcript is available from a number of sources such as nasdaq.com.
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