Intel shares fall 7 percent as 2019 outlook disappoints

Posted on Friday, Jan 25 2019 @ 10:45 CET by Thomas De Maesschalck
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Intel announced fourth-quarter revenue of $18.7 billion and a non-GAAP net income of $5.9 billion, which comes down to $1.28 per share. Revenue was up 9 percent year-over-year, net income rose 14 percent and earnings per share are up 18 percent. This brings the chip giant's full-year revenue to an all-time record of $70.8 billion, a 13 percent year-over-year increase.

The chip giant sold 8 percent less desktop chips and 1 percent more laptop chips versus the year-earlier period, but this was off-set by 13 percent higher pricing in the desktop market, and 6 percent higher pricing in the laptop chip market.

Earnings per share were 6 cents higher than Wall Street estimates but revenue missed by $360 million. For 2019, Intel expects to pull in a record revenue of $71.5 billion and first-quarter revenue of around $16 billion.

Shares tanked 7 percent after the earnings release as analysts spotted several weak spots in the earnings release. First up, the outlook for 2019 was worse than consensus, the fourth-quarter revenue was lower than anticipated due to a variety of factors, including a weaker NAND market, weak modem demand, the Chinese slowdown, and less demand from cloud customers. Especially the revenue miss for Data Center is seen as troubling.

Then again, Intel investors will be happy to hear that the firm is increasing its dividend by 5 percent, to $0.315 per share per quarter.
Intel Corporation today reported fourth-quarter and full-year 2018 financial results. The company also announced that its board of directors has approved a five percent increase in its cash dividend to $1.26 per-share on an annual basis.The board declared a quarterly dividend of $0.315 per-share on the company’s common stock, which will be payable on March 1 to shareholders of record on February 7.

“2018 was a truly remarkable year for Intel with record revenue in every business segment and record profits as we transform the company to pursue our biggest market opportunity ever,” said Bob Swan, Intel CFO and Interim CEO. “In the fourth quarter, we grew revenue, expanded earnings and previewed new 10nm-based products that position Intel to compete and win going forward. Looking ahead, we are forecasting another record year and raising the dividend based on our view that the explosive growth of data will drive continued demand for Intel products.”

In the fourth quarter, Intel achieved revenue growth in nearly every business segment, and in 2018 every segment of the business set new annual all-time revenue records.

The PC-centric business (CCG) was up 10 percent in the fourth quarter due to continued strong demand for Intel's higher performance products and strength in commercial and gaming. CCG expanded its product portfolio for 2019 with the recent launch of new 9th Gen Intel® Core™ processors and unveiled "Ice Lake" the upcoming, 10nm-based PC processor, which is expected to be in OEM systems on shelves for holiday, 2019.

Collectively, Intel's data-centric businesses grew 9 percent YoY in the quarter and 20 percent YoY in 2018. In the fourth quarter, DCG achieved 24 percent cloud segment growth and 12 percent communications service provider segment growth while enterprise revenue declined 5 percent. Intel recently announced that the new "Cascade Lake" family of high performance Intel® Xeon® processors with advanced AI and memory capabilities is now shipping.

Fourth-quarter Internet of Things Group (IOTG) revenue declined 7 percent YoY. However, excluding Wind River, which Intel divested in the second quarter, fourth-quarter IOTG revenue was up 4 percent YoY despite supply tightness. Record quarterly revenue in Intel's memory business (NSG) was up 25 percent YoY. Intel's Programmable Solutions Group (PSG) also achieved record quarterly revenue, up 8 percent YoY driven by strength in the data center and communications market segments.

Mobileye fourth-quarter revenue of $183 million was up 43 percent YoY as customer momentum continued. In 2018, Mobileye achieved 28 new design wins and 78 vehicle model launches.

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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