Date: 25 Jan 2019

Intel Corp’s share price fell almost seven percent in after-hours trading after the Silicon Valley chip making giant reported on Thursday that it had missed its fourth-quarter sales and revenue estimates due to a slowdown in the Chinese economy and weakening demand for its data center business as cloud-based services become more popular. The company also blamed softening microchip demand, as laptop sales slowed in the world’s second-largest economy.

The company also delivered weaker guidance for the first-quarter of 2019, as Intel forecasted a first-quarter revenue of $16 billion and adjusted earnings of $0.87 cents per share. Analysts on average were expecting revenue of $17.35 billion and a profit of $1.01 per share

Intel reported a fourth-quarter net income of $5.2 billion, or $1.12 a share, in comparison with a loss of $687 million, or 15 cents a share, over the same period a year-ago period. Net revenue for the company climbed to US$18.66 billion from US$17.05 billion, although it missed analysts estimates of US$19.01 billion.

The news sparked fears of an industry slowdown, after recent sales warnings from Apple Inc and Samsung Electronics who have also been hit by sluggish demand from China and slowing orders from smartphone makers. Front loading of orders during 2018 also hurt fourth-quarter revenue, as manufactures and semiconductor makers braces themselves for the impact of trade tariffs.

Intel’s interim Chief Executive Officer Bob Swan said that Intel’s business grew by sixty percent over last year but still came in about $200 million below the companies initial target. Intel Corp has been searching for a permanent CEO to drive the company forward since CEO Brian Krzanich unexpectedly resigned in June last year.

 

INTEL CORP Daily Candlestick Chart | Source ActivTrader Platform

INTEL CORP Daily Candlestick Chart | Source ActivTrader Platform

 

The share price is expected to open under heavy selling pressure today on Nasdaq, after closing the day just below the $50.00 level. Intel Corp’s stock has been relatively unchanged from one-year-ago, with the share price trading in the middle of its 52-week range of $42.04 to $57.60.

The stock is now vulnerable to worsening Chinese data, particularly retail sales and manufacturing data for January and a slowing of the global economy, any bullish news on a new CEO being installed at Intel may provide a temporary relief rally.

 

Written by Nathan Batchelor, External Analyst

 

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