Tough Times For Intel Earnings Never Looked Better

Intel Corp. (NASDAQ: INTC) reported its third quarter earnings on Tuesday after the market close, and the set-up for earnings was that the sales would be dragged lower by a lack of PC sales. In short, processors for computers are not where the current trends are. So why is that even with caution that the stock is being so well received.

Earnings came in at $0.58 per share on revenue of $13.48 billion for the quarter. Where things are doing well is that Thomson Reuters was calling for a mere $0.53 EPS on sales of $13.46 billion in revenue. Intel did manage to keep sales flat from a year ago, and they were actually up 5% sequentially. That translates to earnings of about $3 billion, and gross margin was still shockingly high at 62.4%.

Intel called it a quarter of modest growth in a tough environment, The company also guided the following quarter to have margins at 61% and sales of $13.7 billion, plus or minus Intel’s usual couple of percentage points fudge room in either direction and a $500 plus and minus range on sales. We would point out that Intel’s sales for the fourth quarter of 2012 were $13.477 billion, so Intel could actually post year-over-year growth if things in Washington D.C. do not become too out of hand in the coming days or weeks. When things were dire in the past at Intel the guidance was for much more significant caution around future sales.

The PC client sales came in at $8.4 billion (up 3.5 percent sequentially and down 3.5 percent year-over-year) and the data center group sales came in at $2.9 billion (up 6.2 percent sequentially and up 12.2 percent year-over-year). Where Intel is starting to make strides is that over 40 22nm products have been introduced for the ultra-mobile device, networking, storage, and server market segments. This is what has to drive Intel shares much higher, maybe even to $28 to $30 or much higher.

Intel shares closed down 6-cents at $23.39 against a 52-week range of $19.23 to $25.98, and shares were indicated higher by about 1.5% at $23.75 shortly after the earnings report in the after-hours trading session on Tuesday.

If you just listened to Apple lovers and smartphone and tablet users you might think Intel has a questionable future. If you consider that Intel’s rough patches have been there before, things sure seem great in reality versus such a tough perception.