Intel Corp. INTC -0.14% is scheduled to report first-quarter earnings after the market closes Thursday. Here’s what you need to know:
EARNINGS FORECAST: Analysts expect Intel to report earnings of 72 cents a share on an adjusted basis, according to a survey by Thomson Reuters. Intel’s adjusted earnings generally exclude restructuring charges and certain items arising from acquisitions. A year ago, Intel reported $2.96 billion in net.
REVENUE FORECAST: Analysts expect revenue of $15.08 billion, up 1.9% from $14.8 billion a year earlier.
WHAT TO WATCH:
HOW STRONG ARE SERVER-CHIP SALES?: Intel is looking to server chips for growth as personal-computer sales wane. In the fourth quarter, sales in the data-center division expanded 20% from a year earlier, owing to a surprisingly robust jump in sales to corporate customers. Intel had warned in its conference call such a jump was unlikely to recur, and it expects data-center revenue to grow in the high single digits in 2018. And there is competition on the horizon: Nvidia Corp.’s graphics processors, a staple for some artificial-intelligence calculations, are nabbing an increasing share of data-center spending as companies build out machine-learning capacity, while Advanced Micro Devices Inc. AMD -3.77% last year introduced its own competitive server chips. “They’re watching what AMD is doing,” said Vijay Rakesh of Mizuho Securities USA LLC.
HOW BAD ARE PC-CHIP DECLINES?: The first quarter was a good one for PC shipments—if a quarter can be good in a market that has experienced 14 consecutive periods of declines, according to Gartner Inc. PC shipments in the first quarter slipped 1.4% from the previous year, Gartner said, less than some analysts had feared. But Srini Pajjuri, an analyst with Macquarie Capital (USA) Inc., expects Intel’s first-quarter sales of PC chips to have fallen as much as 4%—possibly reflecting the progress of AMD, which last year introduced new designs that posed a competitive challenge to Intel for the first time in years. Intel last year lost 0.4% of its PC market share while AMD gained an equal amount, according to Mercury Research.
WILL INTEL JOIN THE MEMORY PARTY?: Intel has said it may spend $5.5 billion building memory-manufacturing capacity at a single plant, leading some analysts to question whether that is money well spent. The memory market lately has been booming, though, boosting profits at suppliers such as Micron Technology Inc., which in its most recent quarter notched an operating margin of nearly 49%, and SK Hynix Inc., which came in at 50%. In the fourth quarter, Intel’s memory division ran at an operating margin of 3.5%. The company said that segment, which then accounted for 5% of sales, would be profitable this year, but it needs to sell enough product for a payoff. “Every memory company is seeing record profitability, and people are waiting for Intel to join the party,” said Blayne Curtis of Barclays PLC.
Write to Ted Greenwald at Ted.Greenwald@wsj.com