Intel Corp beat Wall Street's fourth-quarter profit and sales estimates, and forecast higher-than-expected revenue in the current quarter.
Its shares initially rose 2 percent after hours, then settled back just above the closing price of $28.19 on Nasdaq.
The following is commentary from investors and analysts:
ADAM BENJAMIN, ANALYST, JEFFERIES & CO
Kind of what we expected. The extra week helps them on the guidance for the March quarter.
But the numbers aren't really what matters here. What matters and will overshadow the numbers is the challenges they have in terms of the end markets and what happens with PCs and handsets, and Windows getting ported to ARM and all those challenges which put them in a tough spot.
The numbers today are not what the business is going to look like in a year from now, two years from now.
What more surprising, the capex they're talking about is almost double year over year. That's a pretty significant number.
Intel is a bellwether, but starting to become less of a bellwether. Clearly it indicates the PC market is not super healthy, but also doesn't have some major problems.
HENRY (HANK) SMITH, CHIEF INVESTMENT OFFICER, HAVERFORD
There's nothing not to be impressed by here. They beat both on top line and bottom line, and it looks like they've increased guidance for next year as well. Even gross margins increased. You are talking about, financially, an incredibly strong company selling at a very low valuation, so it seems the downside risk is minimal here.
One of the themes we see for 2011 is the unleashing of pent-up demand. Both consumers and businesses have held off on purchases ... and the technology sector is going to be a beneficiary.
CRAIG ELLIS, ANALYST, CARIS & CO
Looked pretty strong, quarter better on the topline and bottomline than investors would have expected, the outlook looks very robust and flat sequentially on the topline.
They should be able to maintain the gross margins at 65 percent.
The buzz at CES for Sandy Bridge was positive, they're seeing a good response to the new architecture which has nice graphics improvement compared to prior architectures.
DOUG FREEDMAN, ANALYST, GLEACHER & CO
It does look like earnings power for 2011 is probably going to come in somewhere in the $2.20 (per share) range. That is just plugging in what I would call a stronger first half and a softer second half, yet again, which I think is the right setup.
They're operating well, there's nothing wrong with these numbers. The company is operating well even if strategically challenged, given the increasing adoption of ARM.
Even paying for the settlement with Nvidia and keeping operating expenses flat Q4 to Q1, you are still going to get numbers that are better than most people expected.
The Q1 guidance that they just offered while sounding really good has an extra week in it, so everybody is going to try to discount the Q1 numbers.
ALEX GAUNA, ANALYST, JMP SECURITIES
Obviously this was a nice upside surprise for the company. They were able to work through lackluster PC client trends.
This was a very positive quarter on the data center side. It was a much stronger than expected quarter and I have to imagine we'll see some ongoing optimism around data centers.
Intel is still growing very nicely especially for a megacap and investors are realizing that and that's why shares are trading up after-hours.
On margins: Obviously there are new pricing structures. My take is that they set the bar low to give themselves a cushion and to be able to have pricing pressure without disappointing the Street. We'll see how it plays down.
MAHESH SANGANERIA, ANALYST, RBC CAPITAL MARKETS
The numbers were great. They beat the revenues. I think the expectation was there might be a miss. There is a lot of concern over smartphones and tablets but that will take a backseat in the meantime.
The only thing that is completely out of expectation is their capital expenditure. They are guiding to $9 billion. I was expecting $5 billion to $5.5 billion. That might be why the stock might not be moving as much.
(New chip) Sandy Bridge should have helped because first quarter guidance is pretty strong. The other part is China becoming a larger part of the market.
I have no reason to believe they won't be able to the meet the margins they guided for the year.
KEVIN CASSIDY, ANALYST, STIFEL NICOLAUS
The quarter was kind of as expected, revenue a little better. But we're mostly looking at the guidance. And that's a huge number.
It looks like the death of the PC is greatly exaggerated. We believe it's because of two things, Sandy Bridge launch, their new CPU. It's expected to be the fastest launch of any processor Intel has ever introduced. And second is higher exposure to Asia.
Maybe in Western countries everybody has a PC already and tablets could be cannibalizing. Whereas in Asia there's still lots of people that haven't bought their first PC yet.
PATRICK WANG, ANALYST, WEDBUSH SECURITIES
In the first quarter, they are actually guiding for better than expected gross margins. That's probably the most important financial measure for Intel.
It seems like they're doing pretty well. The stock's not really reacting off of it. Right now there's just a larger overhang over the stock when it comes to tablets and smartphones. That may be an area where investors are more cautious.
(Reporting by Alexei Oreskovic, Liana B. Baker, Yinka Adegoke and Caroline Valetkevitch)