We have written the Worst Earnings Report in our history of covering the company on more than one occasion over the last couple of years. But this time we REALLY mean it That was a comment from a team of analysts at Bernstein, led by Stacy Rasgon, and a sampling of shock waves rippling across the investment landscape after the chip maker delivered its worst results in 20 years and a grim forecast.
The shares of Intel INTC were poised to open a little more than 10% lower at $27.20. They traded around $50 a year ago.
Rasgon, who had cut his price target to $20 per share from $23 and held an underperform rating, zeroed in on the company's first-quarter outlook, calling it awfully bad even compared to low expectations, with revenues and gross margins collapsing. Opinion: Intel just had its worst year since the dot-com bust, and it won't get better soon.
The company warned of a contracting data-center market and a glut of inventory, as Intel forecast a loss of 15 cents a share for the current quarter against expectations it would earn 25 cents, and said revenue would drop further to $10.5 billion, versus an expected $13.93 billion.
It is not an earnings release. It is a crime scene, said Wasteland Capital, a Twitter user who added some colorful reactions to the company's results released late Thursday:
Charlie Bilello, chief market strategist at CPI Wealth, used a chart to visualize how bad the company's 32% slump in fourth-quarter revenue looked on a historical basis:
JPMorgan analysts, led by Harlan Sur, dropped their price target to $28 per share from a prior $32, as they predicted weakness would broaden to Intel's other end market segments beyond PC and datacenter enterprise demand. The bank rates Intel underweight. Given the increased competitive pressures the company is facing in client server compute and a less than stellar track record on technology product execution, we believe it will be a challenging road ahead for Intel as it navigates a tough macro environment and attempts to close the performance gap with AMD, wrote Sur and a team in a note to clients.
Stephanie Link, chief investment strategist and portfolio manager at Hightower Advisors, warned investors to stay away from the stock, saying on Twitter that Intel was one of the value traps out there. She pointed out the 1,200 basis point decline in annual margins and another 480 basis point decline predicted for the next quarter. Harlan said that this is more than the industry's cyclical downturn.
Some pointed to Intel's dividend and said it was time for the company to let it go. It paid $0.36 cash dividends for each quarter of last year, and has faithfully paid a dividend for each quarter since 2013, and paid $1.5 billion in dividends during the fourth quarter.
Cowen analysts were almost left speechless, entitling their research: Couldn't think of a title to describe that, but here s the note anyway. 1 H 23 should be the bottom, but how quickly and to what extent does the business and P&L recover due to competitive pressures and necessary investments for the turnaround? A long road ahead, said a team led by Matthew Ramsay, who cut their price target to $26 per share from a prior $31, keeping a market perform rating.
Bernstein's Rasgon, for one, wasn't sure : We keep asking ourselves when things will be as bad as they can get for Intel. We keep getting surprised.