As Pat Gelsinger returns to Intel Corp. as chief executive, investors are likely to shower past the chipmaker’s quarterly results and the short-term outlook to look for more details on the company’s nebulous plans to get back on track the way as a chip leader.
Intel INTC,
It is expected to report earnings after Thursday ‘s bell, but it is likely that these results would be overshadowed by any details of changes to the company’ s long – term direction before Gelsinger arrives. Gelsinger will next month replace Bob Swan, who took over just two years ago, after leaving his CEO position at VMware Inc. VMW,
to return to the chip maker who has been home for 30 years.
Gelsinger has a lot of work ahead of us to bring Intel back to the glory it once had. In the last year alone, Intel lost its throne as the largest chip maker in the U.S. with a market cap to Nvidia Corp. NVDA,
add additional spring in AMD Advanced Micro Devices Inc.,
step by delaying the next generation of 7-nanometer chips until at least the end of 2022 due to manufacturing issues, and stretched up its organizational structure.
Analysts widely cited Gelsinger’s return as a much-needed image in the arm, but debated details of whether Intel should maintain its own furnaces; go “fabless,” meaning that it would no longer process the manufacturing process of its own chips but enter into a contract; or follow a hybrid approach. Intel officials had promised to announce their decision on that crucial step with this earnings report, although the change was announced at the top a week before the results caused confusion about whether it would happen. still.
Read: With Gelsinger as its new CEO, Intel will find an engineer who will bring innovation back
Recently, there has been talk that Intel Semiconductor Manufacturing Co. Intel’s TSM,
make its 7-nm chips, according to Reuters. That could put undue emphasis on the already thin fabrication capacity of an already thin contract, possibly prompting TSMC to boost its capital cost in 2021. Companies like Nvidia, AMD, Apple Inc. AAPL,
and Qualcomm Inc. QCOM,
already doing the manufacturing out to products like TSMC. The already crowded field could get worse after Microsoft Corp. ‘s MSFT.
announcing that it was developing its own chips, as Apple has already done.
Citi Research analyst Christopher Danley, who has a neutral rating and a $ 55 price target, believes that with Gelsinger at the helm, “everything is on the table” regarding Intel’s path.
“We believe (hopefully) that Mr. Gelsinger will get the ability to make wholesale changes at Intel, starting with manufacturing,” Danley said. “Bob Swan, the outgoing Chief Executive, believes we wanted to support CPU production to TSMC, which could be changed. ”
What do you look
Earnings: Of the 35 analysts surveyed by FactSet, Intel is expected to average post adjusted earnings of $ 1.10 a share, which would be down from a $ 1.52 share reported in the fourth year ago. Intel is forecasting $ 1.10 a share. Estimate, a software platform that uses crowdsourcing from hedge fund executives, insurers, buy-in side analysts and others, seeking earnings of $ 1.15 a share.
Income: Wall Street expects revenue of $ 17.46 billion from Intel, according to 32 analysts surveyed by FactSet. That would be down from the $ 20.21 billion reported in the quarter a year ago. Intel was forecasting revenues of about $ 17.4 billion. Estimate expected revenue of $ 17.59 billion.
Stock transfer: Intel stock declined 3.8% in the third quarter. Over the same period, the Dow Jones industrial average DJIA,
– which counts Intel as part – rose 10.2%, S&P 500 SPX index,
the Nasdaq Composite Index COMP index rose 11.7%,
received 15.4%, and the PHLX Semiconductor Index SOX,
rose 24.6%.
What analysts say
Susquehanna Finance Group analyst Christopher Rolland, who has a neutral rating on Intel and a $ 54 price target on the stock known as the move to the Gelsinger tap, said, “The first important step in solving the problem.”
“Unlike previous CEO Swan who had experience in finance, Gelsinger is a skilled engineer and has even helped an architect with some of Intel’s first x86 designs (such as the famous 80486 processor),” said Rolland. “In particular, the move comes two weeks after the Third Point venture investor announced its involvement in the company and ahead of time there are some important decisions that need to be made regarding the future of manufacturing. Intel. ”
See also: The COVID-19 employment decline is expected to remain, but an end may be in sight
Jefferies analyst Mark Lipacis, who has a grip rating and a $ 50 price target on Intel, said the chip maker still has “set-up challenges,” noting that the x86 model of CPUs lacks started by Intel, and Gelsinger, as relevant as they used to be. acquiring Internet-of-Things technologies, parallel processing technology from Nvidia, and home accelerators from cloud service providers such as Amazon.com Inc. AMZN,
Microsoft, and Alphabet Inc. GOOG,
GOOGL,
Cowen analyst Matthew Ramsay, who has an improved performance rating and a $ 75 price target, said, “Intel ‘s potential turnaround is now beginning.”
“It is difficult to confirm the importance of Mr. Gelsinger’s hiring, not only to Intel, but to the U.S. technology / semiconductor industry,” Ramsay said. “After years of allowing its manufacturing management to evolve, we have long argued that the technologist’s leader needed to solve his technological problems as the world’s largest semiconductor supplier. the world. ”
Of the 38 analysts covering Intel, 13 have a buy rating, 16 have a rating, and nine have sales ratings, with an average target price of $ 57.81, according to FactSet data.