Intel to buy Tower Semiconductor, Marriott posts big revenue beat, Restaurant Brands tops earnings

Yahoo Finance Live's Julie Hyman and Brian Sozzi discuss Intel acquiring Tower Semiconductor as well as fourth quarter earnings for Marriott International and Burger King parent Restaurant Brands.

Video transcript

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JULIE HYMAN: Welcome back to Yahoo Finance Live. We are just a couple of minutes from the opening bell on this Tuesday morning. And we are seeing a boost for the futures, particularly for the NASDAQ, which is up by one and a half percent. That's the strength of the opening that we're expecting this morning.

In terms of some of the movers that we are watching here this morning, we're keeping an eye on Intel. And that's after the company agreed to buy Tower Semiconductor. It's an Israeli semiconductor foundry for about $5.4 billion.

Now, Intel is not moving much. But Tower certainly is. The price on this deal, $53 a share in cash. Tower makes power management chips, image sensors. And Intel has talked about getting back into the foundry business in a more decided fashion, that is, making the chips, not just designing them.

Analyst Brian Sozzi seemed kind of split on this one because Tower is not that huge. Right? So there's some questions, I guess, about whether this is enough of a building block for the company's foundry business.

BRIAN SOZZI: Well, first, you have to give Intel CEO, Pat Gelsinger a little bit of a hat tip. He came in here more than a year ago. Said, hey, I want to build chips for other companies. Here's what I'm going to do. This deal comes a few months removed of them announcing a potential $100 billion investment in Ohio to build out its own chip-making plant there. The initial investment I believe is $20 billion.

But this is Gelsinger really going full force using that strong Intel balance sheet to just build out its global capacity. Now, the real thing to watch here for investors, not necessarily this deal, that is February 17. That is Intel's investor day.

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JULIE HYMAN: There's the opening bell on this Tuesday morning. You see Chipotle ringing the bell. They just opened their 3,000th restaurant. So that's what they're marking here this morning. And the Chipotle executives there on the virtual bell ringing.

I just want to pick up on what you were saying, Sozz, because you were talking about that Intel investor day coming up. What are you going to be looking for from that investor day? And what investors are going to be looking for from that day?

BRIAN SOZZI: I think the big number is capital expenditures. Not to sound completely absolutely boring, but this is a company, Intel, investing billions of dollars to support its business over the next decade of making chips for other companies, as we've seen today via $5.4 billion deal for Tara.

I want to see how they're spending. And then also, too, I want to get their sense of what the returns are on some of these investments. And then lastly, what does all of this investment mean for the company's margins?

I think Intel has been under a lot of pressure recently. We talked to AMD's CEO yesterday, Dr. Lisa Su, a very aggressive company out there, taking market share from Intel. So we want to see what their long-term margin outlook is too.

JULIE HYMAN: Yeah. All of those good questions as the market has not necessarily been terribly patient with Intel. Right? They want Gelsinger to have made all these investments and be doing all this stuff yesterday. So the timeline for this, I think, is important. But it's going to take time to build all this stuff up.

Let's turn to Marriott. Shall we? Because that company came out with earnings this morning. Fourth quarter numbers beating estimates. We know the hotel business has been recovering. Obviously, Omicron dealt a setback here. But the company's earnings per share coming in ahead of estimates. Revenue coming in ahead of estimates as well.

You can see the shares are up three and a half percent. Revenue per available room, which is a key metric, RevPAR as they call it, for the hotel industry, was up 125% year over year. It's still down, though, 19% from the fourth quarter of 2019.

So we have definitely not seen a full recovery in the hotel business, but sort of slow and steady-- well, not even steady-- slow progress, I guess. There have been a lot of fits and starts here.

BRIAN SOZZI: A couple of things here. Occupancy levels by Marriott's various brands still remain by and large under 60%. So there's a lot of potential for them to recover. But also suggests it's going to take some while for business to continue to improve, most notably that business travel.

But Julie, I think the reason why the market is trading off these numbers, or what it is trading off, I should say, they noted new bookings across customer segments have rebounded to pre-Omicron levels. And in this environment, that's a pretty good one.

JULIE HYMAN: Yes. Well as we know, the curve of that has come down pretty quickly. So it's perhaps not surprising to see that. We'll see how that materialized into revenue and some of those other figures we're watching in the coming quarters.

Let's talk fast food. Shall we? QSR is the ticker. Restaurant Brands is the company. Although, I have to tell you, when I looked this up, my first instinct is always to go RBI, but it's not. It's QSR.

The company is trading higher by almost 3% here, by about 3%. Earnings per share coming in ahead of estimates, by about a 20 cent margin here. And the company's revenue coming in a little bit ahead of estimates as well.

It looks like, if you look across the various chains, Tim Hortons comps up 10.3%. Burger King comparable sales up 11.3. Popeyes-- a little womp womp there-- down 0.4%. And digital sales for this company have been growing big. They're about 30% of overall sales now, Sozz.

BRIAN SOZZI: Yeah two things I think the market likes. First is that Tim Hortons number. Same store sales up 10.3% globally. That continues the turnaround at Tim Hortons which I would say is now officially three quarters in the books, or quarters in a row, of a turnaround in Tim Hortons. That is very good to see.

Next up, Burger King. US sales at 1.8%. Last year sales fell 3%. A little bit of a comeback quarter for Burger King. Probably will take a few more quarters for CEO, Jose Cil, to turn that business around.

The real number, Julie, I think one should be excited about, is Firehouse Subs. Restaurant Brands purchased this company in late November for $1.1 billion. Same store sales in the US, which is now I believe close to 1,200 restaurants, but same store sales in the US for Firehouse Subs up 15.2%.

Clearly, Americans are loving all things subs. Unclear what types of subs they're eating, whether they are putting on giant pieces of salami and Swiss cheese. Who cares? I mean, that is a large number and one of the strongest gains in the entire fast food space right now. Shout out to the Firehouse Subs team.

JULIE HYMAN: Now I have to ask you. What's your favorite sub, Brian Sozzi?

BRIAN SOZZI: Why, I go lean, Julie. So if you really want to know, and I think we do have five seconds, I get a sub, a whole wheat sub. I scoop it out to reduce carbs. I go turkey. I go no cheese. I go lettuce. I go tomato and mustard. It's a very low carb, friendly. But again, I get that little taste of bread which excites me.

JULIE HYMAN: A little taste of bread. Nothing like a little taste of bread.

BRIAN SOZZI: Want to talk about the recession scare? I could talk about the recession scare again, too, if you need me.

JULIE HYMAN: I'm quite sure that you could.