Intel Corp. (NASDAQ: INTC) released its most recent earnings report after markets closed on Thursday. The chip manufacturing giant had $0.66 in earnings per share (EPS) and $14.8 billion in revenue, compared to Thomson Reuters consensus estimates which called for $0.65 in EPS and $14.81 billion in revenue. Last year’s first quarter had $0.54 in EPS and $13.8 billion in revenue.
In terms of the outlook for the second quarter, Intel expects to see revenues around $14.4 billion, give or take $500 million, and EPS in the range of $0.63 to $0.73. The consensus estimates for the coming quarter are calling for $0.64 in EPS and $14.34 billion in revenue.
The company reported its business segment revenues as:
Client Computing Group revenue increased 6% to $8.0 billion.
Data Center Group revenue was up 6% to $4.2 billion.
Internet of Things Group revenue jumped 11% to $721 million.
Non-Volatile Memory Solutions Group revenue increased 55% to $866 million.
Intel Security Group revenue of $534 million, down 1%.
Programmable Solutions Group revenue was up 18% to $425 million.
During the first quarter, Intel also generated about $3.9 billion in cash from operations, paid dividends of $1.2 billion, and used $1.2 billion to repurchase 35 million shares of stock. The board of directors also has approved a $10 billion increase to Intel’s share buyback program, which brings the amount currently available for future buybacks to approximately $15 billion.
Brian Krzanich, Intel’s CEO, commented:
The first quarter was another record quarter, coming off a record 2016. We continued to grow our company, shipped our disruptive new Optane memory technology, and positioned Intel to lead in new areas like artificial intelligence and autonomous driving. The ASP strength we saw across nearly every segment of the business demonstrates continued demand for high-performance computing, which will only increase with the explosion of data.
Shares of Intel closed Thursday up 1.4% at $37.43. The stock has a 52-week trading range of $29.50 to $38.45 and a consensus analyst price target of $39.97. After earnings were released the stock was initially down 3.5% at $36.13 in the after-hours session
TWITTER THE TURN AROUND HAS STARTED
When Twitter Inc. (NYSE: TWTR) reported its first-quarter financial results on Wednesday, overall, investors were very pleased as it might be implying that Twitter is finally turning itself around. Over the course of this week the stock actually gained 13% on the earnings, which puts the stock just barely in positive territory on the year so far.24/7 Wall St. has included some highlights from the earnings report, as well as what a few analysts are saying after the fact.Twitter posted $0.11 in earnings per share (EPS) and $548.3 million in revenue. The consensus estimates from Thomson Reuters had called for $0.01 in EPS and revenue of $511.91 million. The same period of last year reportedly had EPS of $0.15 and $594.52 in revenue.
Average monthly active users were pegged at 328 million for the quarter, up 6% year over year and compared with 319 million sequentially. Average daily active usage grew 14% from last year, an acceleration from 11% in the fourth quarter, 7% in the third quarter, 5% in the second quarter and 3% in the first quarter of 2016.In terms of the outlook for the second quarter, the company expects to see adjusted EBITDA in the range of $95 million to $115 million, with the adjusted EBITDA margin between 21% and 21.5%. The consensus estimates call for $0.01 in EPS and $511.91 million in revenue for the coming quarter.
Here’s what analysts had to say after the report:
Canaccord Genuity reiterated its Hold rating but raised its price target to $15 from $14.
BTIG Research reiterated a Buy rating.
Goldman Sachs reiterated a Buy rating with a $20 price target.
Instinet reiterated a Neutral rating and raised its price target to $14 from $13.
JMP Securities reiterated a Market Perform rating.
BMO Capital Markets reiterated a Market Perform rating with a $17 price target.
Jefferies reiterated a Buy rating with a $20 price target.
Wedbush reiterated a Neutral rating and raised its price target to $14 from $13.
Wells Fargo reiterated a Hold rating.
Shares of Twitter were last trading down 0.5% at $16.53, with a consensus analyst price target of $14.05 and a 52-week trading range of $13.73 to $25.25.
PROBLEMS AT INTEL
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The shortage of primary care physicians is going to get worse. The shortfall could be as high as 43,000 by 2030, along with a deficit of specialists in anesthesiology, radiology, neurology, and psychiatry. A lack of surgeons, too. At the same time, a graying US will drive up the need for medical services. By 2030, the US population will grow by about 12%, but the ranks of folks age 65 and up will soar by 55%. Many doctors will hit retirement age over the next decade Immigration policies could add to the problem. About 30% of physicians are immigrants. Making visas tougher to get could particularly hurt rural areas, which often rely on doctors from India, China, the Philippines and elsewhere overseas.
Scott Gottieb will be confirmed as the next commissioner of the FDA. The Republican is a practicing physician and cancer survivor with strong ties to the drug industry. Gottieb served as deputy FDA commissioner from 2005 to 2007 and also worked at the Centers for Medicare & Medicaid services. He has pledged to recuse himself from decisions affecting past clients for one year His top priority: Reauthorizing user fee laws for drugs and medical devices. Fees fund more that half of the agency's budget. Another item high on the agenda is implementing the 21st Century Cures Act to speed up the drug approval process
GOAL IS SMOOTH
The two companies that captured the most global advertising dollars across all types of media last year were Alphabet Inc.’s (NASDAQ: GOOGL) Google and Facebook Inc. (NASDAQ: FB). Between the two, they have captured 64% of all growth in global advertising spending since 2012, the year that Facebook went public. (Google held its initial public offering in 2004.)
Google and Facebook snagged 20% of all media advertising spending in 2016, up from 11% in 2015. The distance between the two remains substantial, however. Google attracted $79.4 billion in advertising spend in 2016, about three times the $26.9 billion that went to Facebook. Comcast Corp. (NASDAQ: CMCSA), the top-ranked traditional media company, ranked third with $12.9 billion in ad revenues.
The data were reported on Tuesday by Zenith Media in its latest edition of “Top Thirty Global Media Owners.”
According to Zenith, “internet advertising has overtaken television to become the world’s largest advertising medium this year.” In addition to Google and Facebook, there are five other pure-play internet media owners in the top 30: Baidu Inc. (NASDAQ: BIDU) ranked fourth, Microsoft Corp. (NASDAQ: MSFT) ranked ninth, Yahoo! Inc. (NASDAQ: YHOO) ranked 13th, Verizon Communications Inc. (NYSE: VZ) ranked 21st and Twitter Inc. (NYSE: TWTR) ranked 30th.
Yahoo and Verizon, combined, would have ranked sixth in 2016, but a more interesting data point is Twitter’s growth. The short-form social media firm saw its ad revenues rise by 734% between 2012 and 2016, the most of any company on Zenith’s list.
Another report on digital media, released Sunday by media investment management firm Group M, expects spending on digital advertising to take 77 cents of every new advertising dollar in 2017. Excluding print advertising (which shows negative growth; i.e., losses) digital captured 72% of every new ad dollar and television took 21 cents. TV’s share is forecast to drop to 17% in 2017.
Group M points out that TV accounted for 42% of all ad spending in 2016 and is expected to account for 41% in 2017. Digital spending took about 33% of total spending in both years.
Spending on digital media already has overtaken TV spending in 10 countries, with another five forecast to join their ranks in 2017. Digital spending exceeds TV spending in Australia, Canada, China, Denmark, Finland, New Zealand, Norway, Sweden, The Netherlands and the United Kingdom. Forecast to be added to the list in 2017 are France, Germany, Hong Kong, Ireland and Taiwan.
A notable issue that may affect both Google and Facebook is the amount of advertising spending lost to fraud, invalid traffic and unacceptable (to advertisers) content. Google, especially, has been targeted for placing automated (programmatic) advertising next to YouTube content that includes hate speech and other offensive material. Some advertisers have boycotted YouTube in an effort to get the site to police itself better. Facebook also has taken some hits, most recently related to the video showing a murder.
Neither Google/YouTube nor Facebook is likely to suffer a massive withdrawal of ad spending due to their enormous reach and low prices for ad placements. However, both will have to expend more effort and dollars into cleaning up their act, seeking to persuade advertisers that they are doing more to combat offensive content and advertising.