Intel (INTC 52.52, -0.94, -1.76%) preannounced strong second quarter results and
the resignation of Chief Executive Brian Krzanich this morning.
“Intel was recently informed that Mr. Krzanich had a past consensual relationship with an Intel employee,” Intel stated in a press release. “An ongoing investigation by internal and external counsel confirmed a violation of Intel's non-fraternization policy, which applies to all managers. Given the expectation that all employees will respect Intel's values and adhere to the company's code of conduct, the Board accepted Mr. Krzanich's resignation from the c-suite and the Board.”
The Board named Robert Swan Interim Chief Executive Officer, effective immediately as the search for a new CEO commences. Swan has been Intel's CFO since October 2016.
Intel also preannounced second quarter results above guidance. Intel expects Q2 EPS of $0.99 (vs. $0.72 last year) with revenue up 14% to $16.9 bln. Intel had guided for EPS of $0.80-0.90 on revenue of $15.8-16.8 bln in April, which was above consensus at the time. This marks the fifth quarter in a row the company has beat on the top and bottom line.
Semiconductors have lagged recent gains in the Nasdaq led by software stocks. Skeptics think the semiconductor cycle is long in the tooth.
Intel continues to report strong results as its data center business approaches 50% of total revenue. Some are concerned about the sustainability of Intel's growth in the data center group, which was up 24% in the first quarter. Last quarter, management alluded to slowing growth in the second half of the year while guiding for mid-to-high teens growth in the business longer term.
With a ~$250 bln market cap, Intel trades at just under 14x earnings.
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