Intel Releases Q3 Financials - Good news or bad?

https://www.anandtech.com/show/15030/intel-announces-q3-fy-2019-earnings-record-results

Revenue for the quarter came in at $19.2 billion, beating Q3 2018 by $27 million, which results in a mere 0.14% growth over last year, but enough to make this the highest revenue ever for the company. Gross margin was 58.8%, down from 64.5% a year ago. Operating income was down 12% to $6.4 billion, and net income was down 6% to $6.0 billion. This resulted in earnings-per-share of $1.35, down 2% from a year ago.

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Looks like they took a hit in the client computing space, but increased well in datacenter and other market segments. Personally, I think there are a few of big takeaways.

First, x86-64 computing is not dying at all. Intel's hit in the client computing division is far less than the overall drop in margin, indicating at least stable if not increasing demand, but at lower prices.

Second, this indicates AMD's strong presence in the client computing space. Since Intel appears to have increased sales at lower margins, it is obvious that Intel is taking this threat seriously.

Finally, data center is where the big money is. Despite the bluster and promises of AMD EPYC server processors, they don't seem to be (yet) causing any damage to Intel's current business model.

Agreed on your points, AMD is taking Desktop market share and the EPYC intrusion will be slow but steady. A few percent in Datacenter means Millions $$$ of profit for AMD, so they don't need half share. Contrary to popular belief - there is enough room in the CPU market for two major players. Intel is going to have a tough couple years. I should short the stock.

Mega6 said:

I should short the stock.

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Hard to know where this could go. Lower Earnings per Share, but apparently the traders like the higher revenue - INTC is currently trading up about 6% from yesterday.

It will be interesting to see what happens when AMD reports next week.

jardows said:

Hard to know where this could go. Lower Earnings per Share, but apparently the traders like the higher revenue - INTC is currently trading up about 6% from yesterday.

It will be interesting to see what happens when AMD reports next week.

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It's more interesting to look longer term, say 1 year. AMD +66% / INTC +25%. Intel can't really grow any bigger, AMD has more room to run by far.

Yes, I am waiting on earnings - should be at least a meet expectations but hoping for a beat expectations. Doubt it will be a blowout like say Tesla.

edit: INTC +7% today LOL. Sometimes I really wonder what the market is thinking. Not sure a meet expectation is worth all that.

merits of hardware only go so far into making a difference in a business where what people buy is more affected by side-deals and kickbacks than objectively better or worse products. So Intel weathering any storm caused by crap hardware releases or much better competitor releases doesn't surprise me. Just like how I'm sure nvidia will last a bit into intel's onslaught into the graphics world when that happens ....at least for a little while.

I wouldn't call Intel's 20th foray attempt into discrete graphics an onslaught - especially since we haven't even seen a product yet.

It's hard to argue with yet another record quarter.

Though they are likely going to take a hit in upcoming quarters, with Cascade lake X, half the price of Sky-X, and likely more adjustments to come across all segments to stay remotely price competitive with AMD.

Snowdog said:

It's hard to argue with yet another record quarter.

Though they are likely going to take a hit in upcoming quarters, with Cascade lake X, half the price of Sky-X, and likely more adjustments to come across all segments to stay remotely price competitive with AMD.

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Dropping market share and slimming margins will show up soon. These are the things the market sometimes doesn't *get* right away until it actually shows up in the financials. I don't anticipate Intel's "foray" into graphics to offset this by any means.

EDIT: I see, it's Intel's bullish forecast .. good luck on that.

It's not a record quarter in the context that they beat lowered forecasts. Still its great for the sector especially entering the winter spree.

thesmokingman said:

It's not a record quarter in the context that they beat lowered forecasts. Still its great for the sector especially entering the winter spree.

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See my first takeaway. The PC market is certainly strong. Q4 results should be interesting for the consumer hardware sector. Without any major console releases, it may be a good holiday season for PC components.

^^I hope this winter rocks. It's shaping up to be with TR3 and 3950x release. And then with Intel slashing prices it's good for all.

Intel still makes sells and more than before because AMD has made greater value for the same price, but people buy AMD first. Intel will probably be in big trouble at the end of 2020. Probably the last quarter when Intel posts financial illusions of their well being.

According to the financial analysts covering this, a big part of them exceeding EPS estimates was due to purchases made out of fear of tariffs - and they believe it was a lot more money than the $200 mil Intel is claiming. AMD better have their server marketing teams aggressively going after that market because it appears many businesses are too scared to make an EPYC jump (pun intended) and abandon Intel if they are willing to make these types of purchases out of fear rather than performance per $.

$trapped said:

According to the financial analysts covering this, a big part of them exceeding EPS estimates was due to purchases made out of fear of tariffs - and they believe it was a lot more money than the $200 mil Intel is claiming. AMD better have their server marketing teams aggressively going after that market because it appears many businesses are too scared to make an EPYC jump (pun intended) and abandon Intel if they are willing to make these types of purchases out of fear rather than performance per $.

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Intel will try to cheat on their results newt year. I have no doubts on that, and even this year they do. It's not true illegal cheating of course, but they will make it look like they are still good.
And I am quite sure that if AMD sells servers and workstations at half the price with double the performance which is what is happening now on Zen 2, normal businesses will go that way. As long as it's made by Dell or HP, you can be sure they will favor AMD if it's more interesting. Also for very big computers, data center, as all the maintenance is made by the company who builds them and they will chose the best performer. Intel is quite in big trouble like it never was before. And also mind that the fact That AMD is not dependent on its own foundries, and uses the best it can get, all the businesses involved including TSMC will join forces to beat Intel at any level with larger means than Intel has.

Jandor said:

Intel will try to cheat on their results newt year. I have no doubts on that, and even this year they do. It's not true illegal cheating of course, but they will make it look like they are still good.
And I am quite sure that if AMD sells servers and workstations at half the price with double the performance which is what is happening now on Zen 2, normal businesses will go that way. As long as it's made by Dell or HP, you can be sure they will favor AMD if it's more interesting. Also for very big computers, data center, as all the maintenance is made by the company who builds them and they will chose the best performer. Intel is quite in big trouble like it never was before. And also mind that the fact That AMD is not dependent on its own foundries, and uses the best it can get, all the businesses involved including TSMC will join forces to beat Intel at any level with larger means than Intel has.

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You can only shift money for a short amount of time and you can’t “cheat” on overall revenue, GM, or profit.

But yeah, they better get on the chiplet bandwagon fast or something equivalent...

Sighs Intel will not be hurt by AMD because even though I don't like it, they are pretty much a monopoly in the sense that there is no way for AMD to increase its production enough for the demand of the market, hence Intel is safe. They should both post growth.

BTW TSMC's expansion won't be enough VS Intel's expansion plans since TSMC's will be shared between different clients.

Jandor said:

Intel will try to cheat...

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I fail to see how Intel is trying to "cheat". Heck for the last year + they have been stating they can't build enough to supply all their customers + they are trying to really go big into other growth areas besides just PC cpus. (We will see if growth continues).

And for the if TSMC + AMD joined forces (which... AMD is basically just a customer of TSMC so TSMC is already doing whatever they can for AMD for a price.) They still wont manage to make even close to an equivalent global supply chain compared to Intel. (If I remember right Intel's supply chain was ranked as the 4th biggest in the world in 2016.)

I really think people forget how expansive Intel is. You have to remember Intel has ~105,000 employees + how many vendors supporting them. We can pretend that AMD/TSMC are paying for the same amount of vendor support, but AMD has what 10,000 employees, and TSMC is at ~48,000. Where TSMC has to continue to support a huge spread of customers.

It really is nice to see competition in the market again, but I for one look forward to seeing what Intel is cooking up as a real response to AMD, and I think it is great to see both companies are doing well while giving us better performance/dollar processors.

I, for one hope, Intel bounces back with a dominant product again in response to AMD's challenge. To root for either color makes no sense. I hope my next build is Intel and the one after that is AMD or whoever has the best product. I hope Intel makes a great video card and AMD and Nvidia have to drop the high end to reasonable prices. I root for reasonable prices on enthusiast products, billion dollar corporations can do their own pom pom waiving.