Even the pessimists were disappointed. After a series of disappointing results, one would have thought that Intel’s management had expressed the entire third of the forecast, which is not the case. The results were very weak and the forecast ahead is very disappointing. Intel stock is falling, is this the end, is this the bottom?
Meanwhile, there seems to be no bottom in sight. It was clear that the personal computer market was weak. Also according to research firm IDC, global shipments of personal computers fell 28% in the last quarter of the year compared to a year earlier, and that’s after a 15% year-over-year decline in the September quarter.
And yet – the fall in forward forecasts is very painful, very surprising. It proves that the entire market is in decline, but Intel much more so. Bernstein analyst Stacey Rasgon, who has been selling Intel for some time, reiterated her sell recommendation with a target price of $20 compared to a previous target price of $23. The stock is at $27.5.
Intel shares have been cut 50% in the past year, while the iShares Semiconductor ( SOXX ) hedge fund, which tracks the performance of the semiconductor index, is down 10%. This illustrates the great weakness in business performance and on Wall Street.
In the fourth quarter, Intel earned half of what was expected – 10 cents instead of 20 cents, the revenues amounted to 14 billion compared to an expectation of 14.5 billion dollars, and if all this was not enough, the predictions came forward. This was not caught, the giant lowered the forecast to 10.5-11.5 billion dollar, when analysts expected about 14 billion dollars. 4-5 quarters ago it was at 18 billion dollars of sales.
“The forecast for the first quarter is particularly bad, even compared to low expectations, when revenues and gross profitability are collapsing,” Rasgon wrote in the analysis report, “the magnitude of the deterioration in results is simply amazing.”
Intel also did not give an annual forecast. It simply has no visibility beyond the first quarter. Its competitors are going through a difficult period as well, but they are eating into market shares in the main products. Sales of data center server chips are falling at the same time as AMD’s strengthening in the field and according to estimates, AMD’s strengthening will continue at the expense of Intel. Intel’s data center segment revenue plunged 33% in the fourth quarter compared to the previous year, with an 84% drop in operating profit. While AMD increases market shares and despite the slowdown in the economy, manages to register a relatively low decline in the field.
Matthew Ramsey, analyst at Cowen, Says that the competition against AMD will intensify in the next two years – “It is quite clear that 2023/24 will be challenging years for Intel. While the long term has a lot of potential, there are few catalysts in the short and medium term.
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