Intel Q2 2019 beats analyst expectations with boost in revenue, sale of modem unit to Apple
Intel has reported its second-quarter financial results, beating analyst expectations and with a revised, improved full-year outlook to $69.5 billion.
Hardware
Intel's Q2 2019 earnings (statement) show revenues of $16.5 billion GAAP, down 3% year over year with basic earnings per share of $0.92, a decrease from Q2 2018's earnings per share of 12%. Non-GAAP earnings of $1.06 were reported.
The tech giant reported an operating income of $4.6 billion, which has declined by 12% year over year.
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Net income in the second quarter of 2019 was reported at $4.2 billion, a 17% year-over-year decrease from $5 billion.
While the balance sheet is not the healthiest Intel has ever reported, the company did beat analyst estimates. Zacks Consensus Estimates expected $15.6 billion in revenue, a decrease of eight% year over year.
Intel also noted that during Q2 2019, the company generated approximately $7.6 billion in cash, paid dividends of $1.4 billion, and used $3 billion to repurchase 67 million shares of stock.
During Q2 2019, Intel's PC-centric business (CCG) revenue was up 1% to $8.8 billion, which the company claims is down to the success of higher-performance products, commercial strength, and customers choosing to invest in Intel solutions before potential tariffs impact the industry.
However, Intel's data-centric businesses reported a 7% slide in revenue, year over year. The Data Center Group (DCG) grew by 3%, while the cloud segment declined by 1%.
Intel also reported a steep drop in enterprise and government-related revenue, a decline of 31%.
Intel's Internet of Things (IoT) group, however, reached a new revenue record of $986 million with a boost of 12% in revenue year over year.
Mobileye achieved Q2 2019 revenue of $201 million, up 16% year over year; the firm's memory unit (NSG) is down 13% year over year to $940 million, and the Programmable Solutions Group (PSG) experienced a drop in revenue of 5%, with revenue falling to $489 million.
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"Second quarter results exceeded our expectations on both revenue and earnings, as the growth of data and compute-intensive applications are driving customer demand for higher performance products in both our PC-centric and data-centric businesses," said Bob Swan, Intel CEO. "Based on our outperformance in the quarter, we're raising our full-year guidance. Intel's ambitions are as big as ever, our collection of assets is unrivaled, and our transformation continues."
Intel might be looking forward to a fresh profit stream in coming quarters, too, considering the debut of 10th generation Intel Core processors -- known as Ice Lake -- which will be hitting the shelves during this year's holiday season.
In Q1 2019, Intel reported non-GAAP earnings of 89 cents per share on $16.1 billion in revenue. The company also reduced its full-year revenue outlook by $2.5 billion to $69 billion. Now, Intel expects revenue of $69.5 billion -- an increase of $500 million -- full-year GAAP earnings per share of $4.10, and a non-GAAP EPS outlook of $4.40.
Intel shares were down 1.44% to $52.16 at market close.
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Earlier this month, reports surfaced that suggest Apple and Intel are in discussions concerning the potential sale of Intel's 5G smartphone modem chip business, valued at $1 billion or more. It was suggested that offloading the unit -- now superfluous to Intel's requirements given its withdrawal from this specific aspect of 5G -- could save the company up to $1 billion a year in operational costs.
The company can now expect a $1 billion cash injection and operational cost savings in the future after announcing the sale of the firm's 5G modem business to Apple, together with patents and over 2,000 members of staff.
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