Here’s Why Intel is Up After Earnings January 13th

Tech bellwether Intel (NYSE:INTC) brought light at the end of a gloomy day. The semiconductor giant reported a 48% bump in profits — or $3.39 ($0.59 a share) versus $2.28 ($0.40) a year earlier.

Shares are up ~2.6% in after-hours trading.

What do we think?

Intel is still off its 2010 high of $24.20. So, it has room to test those levels. The company saw revenues improve to $11.46 billion from $10.57 billion — beating Wall Street expectations for revenues of $11.38 (FactSet).

CFO Stacy J. Smith noted:

2010 was by far our most profitable year. In 2010 demand for microprocessors resulted in record revenue of $43.6B, up 24% year over year. We saw strong market growth in both the business and consumer PC market segments. Additionally the server market segment was particularly strong.

The strength of our product portfolio drove a richer mix of products resulting in an increase in average selling prices. Record volumes, and higher average selling prices coupled with our lowest platform cost delivered a gross margin of 66%.”

What are the risks going forward?

Recently, Intel had some interesting news about competitors NVDIA (NASDAQ:NVDA) getting into the mass market chip game and Microsoft diversifying to ARM Holdings’ (NASDAQ:ARMH) chips. In addition, any pullback in the economy would put pressure on the highly sensitive cyclical shares.

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