Intel (INTC) is scheduled to report results of its first fiscal quarter after the market close on April 22, with a conference call scheduled for 5:00 pm ET. What to watch for:
1. GUIDANCE: Along with its last report, Intel guided for Q1 earnings per share of $1.10 on GAAP revenue of $18.6B and non-GAAP revenue of $17.5B. Two months later, the company said it expects to exceed such guidance due to "continued strong notebook demand." Analysts currently expect Intel to report Q1 EPS of $1.15 on revenue of $17.86B.
2. ARIZONA FACTORIES: On March 23, Intel CEO Pat Gelsinger outlined the company's new manufacturing plans, starting with an estimated $20B investment to build two new factories in Arizona. He also announced Intel's plans to become a major provider of foundry capacity in the U.S. and Europe to serve customers globally. The company expects to begin planning and construction activities for the new factories this year.
3. CHIP SHORTAGE: Amid a major chip shortage that is negatively affecting U.S. car production, Reuters reported on February 11 that a a group of U.S. chip companies, including Intel, Qualcomm (QCOM), Micron (MU) and AMD (AMD), sent a letter to U.S. President Joe Biden to request "funding for incentives," while Apple (AAPL) supplier TSMC (TSM) is undertaking a major expansion as chip demand outstrips supply. The Wall Street Journal said later that month that Biden had plans to address the shortages by ordering a broad review of supply chains for critical materials from semiconductors to pharmaceuticals and rare-earth minerals. On April 5, Reuters reported that Intel CEO Pat Gelsinger would attend a meeting established by the White House for April 12 to discuss the semiconductor supply chain issues affecting U.S. auto production. Bloomberg later reported on April 12 that the chip shortage meeting was not expected to produce substantive outcomes, with White House Press Secretary Jen Psaki calling the meeting part of the administration's "consulting process" on the shortage. Gelsinger told Reuters in an interview that same day that Intel was engaging with automotive chip suppliers to start producing chips in Intel factories in the next six to nine months to help alleviate the shortages.
4. RAYMOND JAMES: Last week, Raymond James analyst Chris Caso downgraded Intel to Underperform from Market Perform, with the downgrade reflecting the risk that the company won't reach its goals under new leadership, and also the pain they will likely endure in pursuit of that goal in terms of capex, lost market share, and a shifting landscape in datacenter that will make the industry less dependent on Intel. The analyst is worried that demand in the PC market has been significantly pulled forward as a result of the pandemic, and anticipates an eventual mean reversion, which may occur just as Intel needs to ramp investment. Caso added that he is "skeptical" about Intel's foundry business.