Chip behemoth Intel (INTC – Free Intel Stock Report) has reported very good news for the June quarter. More precisely, earnings per share came in at $0.55, which was well above our $0.44 estimate and the prior-year tally of $0.39. The company benefited from its strategy to broaden the reach of its silicon content from data centers to PCs to the Internet of Things. With the ramp of its Baytrail SoC (system on a chip) family, it has expanded into new segments, including devices running Google's (GOOG) Chrome operating system, and is on track to reach its goal of 40 million tablet computers sold. INTC stock responded favorably following the news, climbing in a mid-single-digit range and setting a decade-long high in the process.
The PC Client Group posted revenues that improved 9% sequentially and 6%, year over year. What's more, Data Center comparisons fared even better, climbing 14% relative to last quarter and 19% compared with last year. Internet of Things posted a low double-digit improvement quarter over quarter, and was up 24% relative to last year. These positives helped to counteract a sharp decline in the Mobile and Communications group.
As a result of the recent news, we have boosted our forecasts for revenues and earnings for each of the next two years. Specifically, we now look for revenues of $55.145 billion and $56.6 billion for 2014 and 2015, respectively, a sharp improvement from our prior expectations of $54.1 billion and $55.2 billion. Management gave third-quarter guidance of $14.4 billion, plus or minus $500 million, which is markedly above our prior estimate and last year's comparable-period tally. What's more, the gross margin is expected to be about 66%, which represents a 150-basis-point expansion from the June-quarter level.
Given the positive top-line and margin momentum, we are increasingly bullish regarding our earnings estimates for each of the next two years. We now look for respective share net of $2.15 and $2.25 for 2014 and 2015, a $0.15 increment from our prior expectation for each year. We look for the solid momentum to continue for Intel, thanks to new product introductions, which should help propel results in the lucrative tablet market. Stabilization trends in the personal computer market is also a plus.
We continue to view Intel as a favorable selection for conservative, long-term investors seeking a technology holding. Management reported that it intends to repurchase $4 billion worth of common shares in the September interim, with more buybacks probable in the fourth period. The company's current stock-repurchase authorization is $20 billion. Another shareholder friendly move has been the company's ability and interest in raising the dividend. The stock yields 2.6% at recent market prices, which is above the Value Line median. We look for further increases to the dividend in the years ahead, given strong cash flow from operations. Intel's Financial Strength is top notch (A++), while the stock scores well for Safety (1; Highest) and Price Stability (80 out of 100).
About The Company: Intel Corporation is a leading manufacturer of integrated circuits. In addition to primarily supplying manufacturers of personal computers, the company serves a multitude of other global markets, including communications, industrial automation, military, and other electronic equipment. Intel’s product line consists of microprocessors, with the Pentium series being the most notable. It also manufactures microcontrollers and memory chips, and the company sells computer modules and boards, and network products.