Intel Reports Earnings Tomorrow. Should Investors Be Optimistic?

Chip giant Intel is preparing to report its latest earnings results, and there's reason to be relatively optimistic. IDC's latest estimates show that the PC market didn't fare as badly as expected last quarter, thanks in part to an enterprise upgrade cycle that's beginning. Windows XP support officially ends in 2014, which is triggering businesses to upgrade their PCs. Intel's fate remains firmly tied to the health of the PC market, even though it continues to do well in its data-center segment.

Investors will also want to look closely at gross margin outlook, as Intel's recent focus on low-end tablets with its Bay Trail Atom processor could potentially apply downward pressure. Low-cost devices are a key area for future growth, but the requisite low chip prices carry low margins along with them. Intel addressed these fears last quarter by reaffirming its long-term gross margin outlook of 55% to 65%, but investors should be aware of any changes in management's tone on this front.

In this segment of Tech Teardown, Erin Kennedy discusses Intel's upcoming earnings with Evan Niu, CFA.

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The article Intel Reports Earnings Tomorrow. Should Investors Be Optimistic? originally appeared on Fool.com.

Erin Kennedy and Evan Niu, CFA, both have no position in any stocks mentioned. The Motley Fool recommends and owns shares of Intel. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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