Intel Inc. (INTC - Get Report) shares were marked sharply lower Friday after the chipmaker disappointed investors with weak fourth quarter revenues and a tepid profit outlook it said was linked to slowing demand in China.
Intel said it sees current quarter earnings of 87 cents a share, well shy of the $1.01 consensus forecast, with sales coming in at $17.35 billion, again missing analysts' estimates by more than $1 billion. That guidance followed a disappointing December quarter which interim CEO Bob Swan linked to the "digestion" of chips sold in advance of the U.S.-China trade dispute by big data-center customers in China, thus slowing sales over the final three months of the year.
"Trade and macro concerns, especially in China have intensified. Cloud service providers shifted from building capacity to absorbing capacity and the demand pricing environment has further deteriorated," Swan told investors on a conference call late Thursday. "Those incremental headwinds are impacting our revenue expectations and slightly reducing our operating margin percentage forecast."
Intel shares fell 7.15% in the opening minutes of trading Friday to change hands at $46.20 each, a move that would trim the stock's three month gain to around 10%.
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"Intel noted many of the same problem areas that we've highlighted: softer modem demand (soft iPhone sales), a slowing Chinese economy, slowing demand from cloud customers (absorbing capacity), and a weakening NAND environment," said KeyBanc Capital Markets analyst Weston Twigg. "Still, Intel isn't forecasting a severe decline, and it expects revenue to grow modestly in 2019, indicating that it may be holding up relatively well as it expands its TAM and launches new products."
Intel has been without a permanent leader since it parted ways with former CEO Brian Krzanich in June 2018 amid allegations of an inappropriate relationship with an employee. Chief financial officer Bob Swan has taken the reins on an interim basis and there are rumored candidates for the top job, but the company did not provide any guidance in its report on Thursday on who would be taking the helm permanently.
"The Board continues to evaluate candidates for what I believe is the biggest and best open job on the planet," Swan told investors at the start of Thursday's conference call. "They are proceeding with a sense of urgency while also ensuring that they make the right choice for this great company."