Intel May See Boost From Demand For PC Chips--Earnings Preview

   By Don Clark 
 

Intel Corp. is scheduled to report its financial results for the fourth quarter ended Dec. 27 on Thursday after the market closes. Here are a few things to watch.

-EARNINGS FORECAST: Earnings of 66 cents a share is the median of estimates compiled by Thomson Reuters, up from 51 cents a share in the same quarter last year.

-REVENUE FORECAST: Wall Street analysts expect revenue of $14.71 billion, up from the $13.83 billion the semiconductor giant reported one year earlier.

 
WHAT TO WATCH 
 

--PC POWER: Intel, the kingpin in processors for personal computers, has benefited from signs that tablet computers aren't widely replacing PCs for work chores as previously predicted. That's a key reason Intel's share price rose by nearly 40% in 2014. The latest estimates from Gartner and IDC point to roughly flat world-wide unit sales for PCs in the fourth quarter. But sharp increases in the U.S., and by manufacturers like Hewlett-Packard and Dell, point to use of higher-end chips that could make Intel's revenues grow faster than the total PC market. And the company has some new PC chips, unveiled at the Consumer Electronics Show last week, that could boost Intel's outlook for the first quarter.

--DATA CENTER DEMAND: Intel sells well over 90% of the chips used in server systems, which deliver Web pages and carry out back-office functions for many companies. Chips for Intel's data center group grew 16% in the third quarter, and another solid showing is likely in the fourth period. But there are some wild cards: shifts by companies to run some operations at cloud providers like Amazon Web Services, for example, could hold down total server purchases.

--MOBILE MACHINATIONS: Chief Executive Brian Krzanich made a high-profile pledge to get Intel chips in 40 million tablets in 2014, a target Intel is expected to hit. But there was a huge cost as Intel provided subsidies to hardware makers to shift away from rivals that use ARM Holdings chip designs, triggering a projected $4 billion in operating losses in the company's mobile and communication group for 2014. Intel said in November that it would combine operations of that unit with the bigger group that handle PC chips, a move that could obscure those losses. But that change is not expected to affect Intel's income statement immediately, so analysts will be watching the mobile bottom line while they can in the fourth period.

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