Semiconductors largely buck Intel weakness as earnings kicks into high gear
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Semiconductor stocks largely bucked the weakness related to Intel (NASDAQ:INTC) on Friday ahead of several key industry earnings reports.
AMD (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA), both of which compete with Intel (INTC), rose 1.2% and 2.8%, respectively on Friday, shrugging off earlier losses associated with weakness related to the Pat Gelsinger-led Intel (INTC).
AMD (AMD) is slated to report fourth-quarter results next week, as is industry stalwarts NXP Semiconductor (NASDAQ:NXPI). Next week will also see the quarterly results from big tech companies such as Apple (AAPL), Amazon (AMZN) and Google (GOOG) (GOOGL), all of which which are increasingly designing their own chips for their products.
Intel (INTC) shares fell nearly 7.3% on Friday - though off their worst levels of the session - after the semiconductor giant reported weak fourth-quarter results and issued a shocking forecast, leaving many on Wall Street to question whether the dividend is safe.
Bernstein analyst Stacy Rasgon, who has an underperform rating on Intel (INTC), called the level of deterioration for the financial results "stunning" and became concerned for the company's cash position.
"It is now clear why Intel needs to cut so much cost as the company's original plans prove to be fantasy," Rasgon wrote in a note to clients. Ragson said the magnitude of Intel's (INTC) deterioration is so large that it "brings potential concern to the company's cash position over time, in our opinion."
Ragson went on to add that with Intel (INTC) likely to start burning through cash, "it seems reasonable to think that investors should at least start thinking about the security" of the chip giant's dividend payments.
Looking to the first-quarter, Intel (INTC) expects to lose 15 cents a share, excluding one-time items, with revenue forecast to be between $10.5B and $11.5B. The company also expects gross margins to fall below 40%, coming in at 39%.
Analysts expect the company to earn 25 cents a share, generate $13.96B in revenue and have gross margins of 45.5%.
Intel (INTC) badly missed fourth-quarter estimates as well, as the company earned 10 cents per share on $14.04B in revenue. A consensus of analysts expected Intel (INTC) to earn 20 cents per share on $14.5B in revenue.
The company said the shortfall was due to weakness in its Client Computing and Datacenter and AI-related units, which saw revenue fall 36% and 33% year-over-year, respectively. Its nascent foundry business, which CEO Gelsinger is working to help lead Intel's (INTC) transition, generated $319M in revenue in the quarter, up 30% year-over-year.
Taiwan Semiconductor (TSM) and GlobalFoundries (GFS), Intel's much larger foundry competitors, were mixed in mid-day trading.
Other chip stocks were largely green at mid-day, with Micron (MU), Qualcomm (QCOM), ON Semiconductor (ON) and Texas Instruments (TXN) seeing gains.
Broadcom (AVGO), Qualcomm (QCOM) and Skyworks Solutions (SWKS) saw fractional losses.
Meanwhile, Seeking Alpha contributors such as Stone Fox Capital said that when it comes to what Intel (INTC) reported on Thursday, "You were warned."