Intel shares having worst day in 15 months

Chipmaker reports large drops in quarterly and year-over-year revenues

Intel shares are falling Friday and are on target for their lowest point since October 2021 when the stock dropped 11.68%. The drop would cut $10 billion from the semiconductor maker's market cap.

The Santa Clara, Calif.-based company reported a 32% drop in year-over-year revenue late Thursday. Fourth quarter revenue came in at $14 billion. Analysts expected $14.45 billion. 

Intel also predicted a surprise loss for the first quarter and its revenue forecast was $3 billion below estimates as it struggles with slowing growth in the data center business.

"The drop in sales, combined with the company’s substantial fixed costs (as evidenced by $80 billion in tangible fixed assets on the balance sheet, compared to $64 billion in annual revenues), will lead to a deeper net loss in the first quarter and the third trading deficit in the last four reporting periods," said AJ Bell investment director Russ Mould.

As tracked by the Dow Jones Market Data Group, the stock is currently the worst performer in the Dow Jones, S&P, and Nasdaq 100.

Intel Corporation

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Ticker Security Last Change Change %
INTC INTEL CORP. 30.46 -0.30 -0.98%

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Sympathy pains or opportunity?

"It is possible to argue that some of Intel’s woes are self-inflicted, as its inability to crack the mobile market has cost it sockets at Apple, which has started to use its own silicon chips in its Mac PCs, and Advanced Micro Devices has taken market share in the wider microprocessor market at Intel’s expense," Mould said.

"But Intel’s problems could be deeper even than those and leave the entire semiconductor industry on a state of red alert."

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"Despite the economic and market headwinds, we continued to make good progress on our strategic transformation in Q4, including advancing our product roadmap and improving our operational structure and processes to drive efficiencies while delivering (Patrick T. Fallon/Bloomberg via Getty Images / Getty Images)

"AMD's Genoa and Bergamo (data center) chips have a strong price-performance advantage compared to Intel's Sapphire Rapids processors, which should drive further AMD share gains," said Matt Wegner, analyst at YipitData.

Analysts said that puts Intel at a disadvantage even when the data center market bottoms out, expected in the second half of 2022, as the company would have lost even more share by then.

"It is now clear why Intel needs to cut so much cost as the company's original plans prove to be fantasy," brokerage Bernstein said.

"The magnitude of the deterioration is stunning, and brings potential concern to the company's cash position over time."

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Researchers works semiconductor product

Researcher plants a semiconductor on an interface board during a research work to design and develop a semiconductor product at Tsinghua Unigroup research centre in Beijing, China, February 29, 2016. (Reuters/Kim Kyung-Hoon / Reuters Photos)

Intel, which plans to cut $3 billion in costs this year, generated $7.7 billion in cash from operations in the fourth quarter and paid dividends of $1.5 billion.

With capital expenditure estimated to be around $20 billion in 2023, analysts said the company should consider cutting its dividend.

Trading is mixed for other semiconductor companies on Wall Street. Nvidia is up. Advanced Micro Devices and Applied Materials are down.

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Reuters contributed to this report.

Ticker Security Last Change Change %
INTC INTEL CORP. 30.46 -0.30 -0.98%
NVDA NVIDIA CORP. 129.61 +4.41 +3.52%
AMD ADVANCED MICRO DEVICES INC. 159.11 -0.79 -0.49%
AMAT APPLIED MATERIALS INC. 237.55 -0.10 -0.04%