Intel Releases Disappointing Q4 2018 and Full-Year 2018 Financial Results

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cageymaru

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Intel has released its Q4 2018 and full-year 2018 financial results. The fourth quarter revenue was $18.7 billion, up 9 percent year-over-year (YoY); and full-year revenue set an all-time record of $70.8 billion, up 13 percent YoY. According to CNBC, analysts had predicted a higher revenue number of $19.01 billion and this caused shares of Intel to fall 8% in after hours trading. On a positive note, Intel posted a fourth-quarter earnings per share of $1.12 ($1.28 on a non-GAAP basis) and achieved record full-year operating income, net income and EPS. The company generated a record $29.4 billion cash from operations, generated $14.3 billion of free cash flow and returned nearly $16.3 billion to shareholders. This did not dissuade analysts from criticizing Intel's Q1 2019 revenue projections as "light." Intel expects a record 2019 revenue of approximately $71.5 billion and first-quarter revenue of approximately $16 billion.

Collectively, Intel data-centric businesses grew 9% YoY in Q4 and 20% YoY in 2018. The Intel Data Center Group failed to meet analyst estimates for revenue as growth from cloud fell sequentially from 50 percent to 24 percent. "Cloud providers are currently "absorbing capacity," Intel said in its quarterly presentation to investors." Of particular interest to our readers was the Client Computing Group numbers as it includes PC chips. This segment was up 10%, but still didn't meet analyst estimates. Q4 revenue for the Internet of Things Group (IOTG) declined 7% YoY. There are more numbers to crunch in the Intel News Release. The Intel Q4 2018 Earnings Presentation can be found here and the Q4 2018 Intel Corporation Earnings Conference webcast can be located here. The company's U.S. Securities and Exchange Commission (SEC) filing can be found here. Intel revealed that it is still evaluating candidates for its open CEO position.

Shares of Intel stock fell as much as 8 percent on Thursday after the company reported lower-than-expected revenue for the fiscal fourth quarter and light guidance. Bob Swan, Intel's finance chief, has since been serving as interim CEO. "The board continues to evaluate candidates for what I believe is the biggest and best open job on the planet," Swan told analysts on a conference call following the earnings release on Thursday. "They are proceeding with a sense of urgency while also ensuring that they make the right choice for this great company." Intel said it expects around $15.5 billion in capital expenditures in the 2019 fiscal year. That's higher than the $14.26 billion FactSet estimate.
 
"Intel revealed that it is still evaluating candidates for its open CEO position."

What? I can still apply and become the [H] insider! Leaking for the peoples! (doesn't sound quite right...)
 
The stink of failure is slowly beginning to cling to Intel, as it did to AMD prior.
 
LOL - the title only shows how spoiled the kids at wall street are ---- Intel will be fine.
 
Disappointing depends on your perspective. Intel intentionally sat on their hands when they were unchallenged and tried to keep milking the cow instead of innovating. Personally I find their performance results exciting.
 
This shouldn't surprise anyone. They are absolutely hemorrhoids market share since Zen especially in the very lucrative server market.

If you have Intel stock and plan on keeping it, it's going to get worse before it gets better.

I have no doubt Intel will be back on top eventually, between AMD always finding a way to screw things up and Intel loving to play dirty, it's probably inevitable, but at least the CPU market will be interesting for the next couple to few years.
 
I find the stock market kinda frustrating; the "analysts" set an expectation, a company meets/doesn't meet it, instant gratification/failure yet, intel increased revenues year over year and had growth... wtf and this is despite them standing pat and having security issues.

wall street is a cancer.
 
Zarathustra[H] said:
This shouldn't surprise anyone. They are absolutely hemorrhoids market share since Zen especially in the very lucrative server market.
Click to expand...
Intels numbers have been pretty good. They are down on a slight revenue miss and lower guidance. We will have to wait for AMD to report their numbers to see if they took server market share. We all know they are doing well on the desktop. The desktop market is low margin. Servers is where the high margin big money is at.
 
Slade said:
I find the stock market kinda frustrating; the "analysts" set an expectation, a company meets/doesn't meet it, instant gratification/failure yet, intel increased revenues year over year and had growth... wtf and this is despite them standing pat and having security issues.

wall street is a cancer.
Click to expand...


Investors make educated guesses where a company is going. Supply and demand in the market then winds up organically setting the stock price based on the average of the guesses of many thousands of investors and what they buy and are willing to pay.

If a companys performance then exceeds the average of the guesses of the thousands of investors, then there is more value there than is already built into the stock price, and the price shoots up.

If a companys performance doesn't meet the average of investor guesses, then there is more value built in to the stock than the performance can support, and the price falls.

The key here is that stock has no value in and of itself. Its value is based on the expectations of future performance. That's why it is such a gamble.

I'm curious how else you would have it work?
 
Slade said:
I find the stock market kinda frustrating; the "analysts" set an expectation, a company meets/doesn't meet it, instant gratification/failure yet, intel increased revenues year over year and had growth... wtf and this is despite them standing pat and having security issues.

wall street is a cancer.
Click to expand...
They forecast stocks like the weather. Sometimes it works...
 
Maybe I am missing something how is a 8% YoY quarterly growth equate to failure? I mean I know Intel stock goes down even when they meet expectations, but going from a ~62B to >70B per year revenue and the stock is nearly flat compared to last year.

Personally I completely disagree with the the title, but meh tis the way to get people to click I guess.
 
Zarathustra[H] said:
Investors make educated guesses where a company is going. Supply and demand in the market then winds up organically setting the stock price based on the average of the guesses of many thousands of investors and what they buy and are willing to pay.

If a companys performance then exceeds the average of the guesses of the thousands of investors, then there is more value there than is already built into the stock price, and the price shoots up.

If a companys performance doesn't meet the average of investor guesses, then there is more value built in to the stock than the performance can support, and the price falls.

The key here is that stock has no value in and of itself. Its value is based on the expectations of future performance. That's why it is such a gamble.

I'm curious how else you would have it work?
Click to expand...

Actually I've seen company going above target taking a hit more than often. It's like "euh oh you said you would do +10% yoy on XYZ metric but you did +22%, you're either bad at your job or under-evaluating it so we're not mad at you"... Really sick of all this bs tbh (full disclaimer, I'm at the bottom of the chain so this is opinion more than anything else, fell free to flame me :))
 
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MMitch said:
Actually I've seen company going above target taking a hit more than often. It's like "euh oh you said you would do +10% yoy on XYZ metric but you did +22%, you're either bad at your job or under-evaluating it so we're not mad at you"... Really sick of all this bs tbh (full disclaimer, I'm at the bottom of the chain so this is opinion more than anything else, fell free to flame me :))
Click to expand...


Well, personally I never hold individual stocks. The only thing I ever invest in is extreme low fee index matching funds.

No one, not even the best hedge fund managers in the world can consistently beat the market long term.

I subscribe to the advice of Harold Pollack in his Investing Index card. It lines up with my experience from the few fixed income investing classes I took in business school (before I decided it wasn't for me) Essentially his research has shown that most people over-complicate their investments, do stupid things and take unnecessary risks, and everything the individual needs to know about investment can fit on an index card, and he proves it:

index-card-1200x899.jpg


  • Max your 401(k) or equivalent employee controbution.
  • Buy inexpensive well-diversified mutual funds (I do index matching funds with a thousandth of a percent fee or less)
  • Never buy or sell an individual security. The person on the other side of the table always knows more than you do about this stuff.
  • Save 20% of your money
  • Pay your credit card balance in full every month
  • Maximize tax-advantaged savings vehicles like Roth SEP and 529 accounts.
  • Pay attention to fees. Always avoid actively managed funds. After fees are considered, they rarely beat the market.
  • Make any financial advisor you speak to commit to a fiduciary standard (in writing). Or better yet, don't use one at all.
  • Promote social insurance programs to help people when things go wrong.

(some emphasis and additions added by me)

If you want to not be a sucker just do the above, hold only extremely low fee index matching funds, set up an automatic balance to shift your investments between index matching funds so they compensate for each other.

Never do the following:
  • Never trust a financial adviser. Briefly Obama era legislation forced them to act as fiduciaries (legally bound to work to your maximized advantage), but that has now been reversed, and we are back to th epre financial crisis era, when they could just make your eyes glaze over with big words, and shift all your investments to what gives them the biggest commission, regardless of how good (or not) it is for you.
  • Never check your balance: It's just going to make you nervous and do something stupid (like move to money markets or buy gold when the market goes down)
  • Never move your money. If you cant afford to maximize your 401k contribution, start with the amount your company matches, and then increase it a percent or two every year when you get a raise and otherwise just forget it exists. If you are more than 10 years from retirement, you can ride out any market downturn.

The absolutely worst thing you can do is panic during a downturn and sell and buy something else (money markets, Gold, etc. etc.) If you do you have locked in your losses. Just patiently wait for the downturn to end, continuing to do what you've always done. Keep in mind, when you buy during a downturn with your regular paycheck contributions, that will be worth more later when the market goes up.

Keep doing this until ~10 years before retirement. Now it gets trickier, because now you don't have enough time to ride out a market downturn, and having to take money out of your 401k during a downturn is bad. You can't completely eliminate risk, but there are ways to reduce it. You can shift a percentage of your money to a bond fund and autobalance between bonds and stocks every month. (Bonds usually have lower returns, but they also tend to go up in value when stocks go down) Target 20-50% bonds depending on how risk averse you are. (higher percentage, more risk averse)

It just takes discipline. Never panic, never actively manage. Set it up, and just ignore it.

There are a lot of hot shots in the investing world who think they are better and smarter than every one else, and can continually beat the market. They are almost always wrong.
 
MMitch said:
Actually I've seen company going above target taking a hit more than often. It's like "euh oh you said you would do +10% yoy on XYZ metric but you did +22%, you're either bad at your job or under-evaluating it so we're not mad at you"... Really sick of all this bs tbh (full disclaimer, I'm at the bottom of the chain so this is opinion more than anything else, fell free to flame me :))
Click to expand...

Actually, let me speak more about this.

We used to think that the wisdom of the crowd made markets ultimately rational. Sure, one person can make mistakes, but millions of investors on average tend to make pretty decent decisions. The Great Recession proved that to be wrong.

You always have to keep in mind whose metric and whose assessment you are looking at. The person making the assessment may know their shit and be spot on, or they may be a hack, and be completely off. That, and the investing public are not rational. They often make emotional decisions in the stock market, buying stock because they like a company or its CEO, and selling it off, if they don't like them, or panicking when things go down. Remember, a good deal of investors are not very good at investing and do stupid things. This can explain these counter-rational stock price moves. They tend to be short term though, and correct themselves.
 
Mega6 said:
Intels numbers have been pretty good. They are down on a slight revenue miss and lower guidance. We will have to wait for AMD to report their numbers to see if they took server market share. We all know they are doing well on the desktop. The desktop market is low margin. Servers is where the high margin big money is at.
Click to expand...

Yep, but keep in mind that stock values are forward looking.

According to DrameXChange, as of December AMD had already snatched 2% market share from Intel. This may not seem like much, but they used to have next to 0% here with Intel close to 100%, so 2% is a HUGE leap. And this is before the 7nm parts even launch. It's the 7nm ROME parts that are widely expected to REALLY shake things up, especially since chiplets will allow them to more effectively bin things even with smaller volumes.

AMD is in the best position right now on the CPU front they have been in a very very long time. Pay for development and operations using low margin revenue from large volume shipments of low binned chiplets in next gen consoles. Save the higher bins for high performance Desktop, Workstation and Server parts which should be close to all profit.

AMD being AMD and Intel being Intel, there is always a chance that AMD will screw it up, and Intel will use sly illegal anti-market maneuvers to try to prevent their success, but I am hopeful that we will have a competitive CPU market in the future. Regardless of which CPU brand you prefer, having them compete with each other benefits everyone.
 
Intel has a fairly low price to earning ratio and a decent dividend. I'm watching them - but have invested in AMD for now.
 
I ignored most all posted except maximizing Ira and 401k. Don't have cable tv, live cheap. Pay my credit cards off every month. I could pay off my 3.5% mortgage off, but can make more investing than that. Do the math. I invest in what I know, concentrations that would make a broker have a heart attack. Held while under a crap load because I knew that fundamentally, it's going up. Invested high risk high tech on a company that was on the brink of extinction against two of the biggest and baddest companies on the planet. Ignored the short players and ignored the chart analysts. Some rock solid companies that doubled and some went nowhere or sank like rocks. And AMD tripled. Bingo.

Nothing ventured, nothing gained. Imagine making 5 or 10 percent a day on a stock portfolio. Now I can tell you, you shouldn't do almost anything I just wrote.
 
Slade said:
I find the stock market kinda frustrating; the "analysts" set an expectation, a company meets/doesn't meet it, instant gratification/failure yet, intel increased revenues year over year and had growth... wtf and this is despite them standing pat and having security issues.

wall street is a cancer.
Click to expand...

Stock prices are based on one thing and one thing only: The expectation of future profit. Yes, Intel had a GREAT quarter, but not as great as it's shareholders expected, so the stock drops to reflect the expectation of less profit going forward.
 
Mega6 said:
I ignored most all posted except maximizing Ira and 401k. Don't have cable tv, live cheap. Pay my credit cards off every month. I could pay off my 3.5% mortgage off, but can make more investing than that. Do the math. I invest in what I know, concentrations that would make a broker have a heart attack. Held while under a crap load because I knew that fundamentally, it's going up. Invested high risk high tech on a company that was on the brink of extinction against two of the biggest and baddest companies on the planet. Ignored the short players and ignored the chart analysts. Some rock solid companies that doubled and some went nowhere or sank like rocks. And AMD tripled. Bingo.

Nothing ventured, nothing gained. Imagine making 5 or 10 percent a day on a stock portfolio. Now I can tell you, you shouldn't do almost anything I just wrote.
Click to expand...

You can do a lot worse then investing in undervalued companies that are trading under $5/share; one good product can lead you to tripling your investment. Investment in dollar stocks is totally a thing.

Case in point: AMD going from $1.60 to $15 in just over a year.
 
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Mega6 said:
Intels numbers have been pretty good. They are down on a slight revenue miss and lower guidance. We will have to wait for AMD to report their numbers to see if they took server market share. We all know they are doing well on the desktop. The desktop market is low margin. Servers is where the high margin big money is at.
Click to expand...

I never expected AMD to gain big time in server market until second gen Ryzens roll out and couple of years in. EPYC 2 is just looking too damn good at this point when it comes to efficiency and performance. They already have super computer stuff lined up. I do think that you will start to see some really good results for AMD towards the end of 2019. No matter how biased some IT bosses might be 7nm epyc 2 is going to be hard to resist. Its going to be slow and steay market share gain for AMD.
 
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Zarathustra[H] said:
Yep, but keep in mind that stock values are forward looking.

According to DrameXChange, as of December AMD had already snatched 2% market share from Intel. This may not seem like much, but they used to have next to 0% here with Intel close to 100%, so 2% is a HUGE leap. And this is before the 7nm parts even launch. It's the 7nm ROME parts that are widely expected to REALLY shake things up, especially since chiplets will allow them to more effectively bin things even with smaller volumes.

AMD is in the best position right now on the CPU front they have been in a very very long time. Pay for development and operations using low margin revenue from large volume shipments of low binned chiplets in next gen consoles. Save the higher bins for high performance Desktop, Workstation and Server parts which should be close to all profit.

AMD being AMD and Intel being Intel, there is always a chance that AMD will screw it up, and Intel will use sly illegal anti-market maneuvers to try to prevent their success, but I am hopeful that we will have a competitive CPU market in the future. Regardless of which CPU brand you prefer, having them compete with each other benefits everyone.
Click to expand...

One intangible thing, AMD now has the power of Lisa Su. I believe the technical reality is that x86/64 advancement is slowing, just like phone tech, ect. The convergence and the end of moore's law will ensure that AMD and Intel will no longer lead each other by leaps. Performance will converge So now businesses will choose AMD or Intel. Just a few percent more of server sales will launch AMD stock into the stratosphere. That's my belief. It may be this year, it may never. I'm taking that chance it will. That's why AMD pe is sky high. It has awesome potential. There is no other company placed in such a strategic spot in hardware.

CPU AND GPU. Think about that. No one else has those two together.
 
gamerk2 said:
You can do a lot worse then investing in undervalued companies that are trading under $5/share; one good product can lead you to tripling your investment. Investment in dollar stocks is totally a thing.

Case in point: AMD going from $1.60 to $15 in just over a year.
Click to expand...
Just don't be stupid about it. Research, and only invest what you're willing to lose. Definitely don't take out a loan unless you're certain it'll turn around or you can afford to write off any losses.

Edit: wrong terminology, forget the proper term.
 
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Nobu said:
Just don't be stupid about it. Research, and only invest what you're willing to lose. Definitely don't hedge unless you're certain it'll turn around or you can afford to write off any losses.
Click to expand...
Good point. Never did options and never traded on a margin account. Options a whole higher level of risk / reward.
 
Mega6 said:
Good point. Never did options and never traded on a margin account. Options a whole higher level of risk / reward.
Click to expand...
Yeah, still can't quite wrap my head around options. I think I understand them, but not well enough to know when to buy or write one.

Afa intel, I bought at around $42-44, so I'm feeling pretty good. I expect this to be a temporary dip, worst case it might stay about the same or drop below $44 again. Don't expect intel to just lay down and die at any rate.
 
Nobu said:
Yeah, still can't quite wrap my head around options. I think I understand them, but not well enough to know when to buy or write one.

Afa intel, I bought at around $42-44, so I'm feeling pretty good. I expect this to be a temporary dip, worst case it might stay about the same or drop below $44 again. Don't expect intel to just lay down and die at any rate.
Click to expand...

Same as you, options I don't really "get" or care to.

The thing is, you won't get rich owning Intel stock. It's just that they pretty much have peaked out and have nowhere to go but down.

Our parents would have told us that they own GE stock and set for life. Look at it now. The only thing worth anything at GE is the jet engine division.
 
M76 said:
I definitely wouldn't base the livelihood of people on what is basically astrology or fortune telling.
Click to expand...

Sadly that's just the way things are. It cannot be any other way. No matter what you do in the economy, start a company, or a new job, there is always the uncertainty of the future.

The only way this could ever be different is if we could see into the future.
 
Zarathustra[H] said:
Sadly that's just the way things are. It cannot be any other way. No matter what you do in the economy, start a company, or a new job, there is always the uncertainty of the future.

The only way this could ever be different is if we could see into the future.
Click to expand...
I don't mean uncertainty. I mean that a bunch of stuck up wall street nerds over/under valuing a company can break it regardless of the actual performance.
I agree with the notion that not just wall street but the entire idea of the stock market is cancer.


Yes companies go public because if it works out they make a boatload more than they did private. But I just loath the idea that wealth should be distributed by what is basically gambling.
 
M76 said:
I don't mean uncertainty. I mean that a bunch of stuck up wall street nerds over/under valuing a company can break it regardless of the actual performance.
I agree with the notion that not just wall street but the entire idea of the stock market is cancer.


Yes companies go public because if it works out they make a boatload more than they did private. But I just loath the idea that wealth should be distributed by what is basically gambling.
Click to expand...

The problem is the stock market, in theory, should represent value. But it doesn't; it represents the *expectation* of future value.
 
Zarathustra[H] said:
Well, personally I never hold individual stocks. The only thing I ever invest in is extreme low fee index matching funds.

No one, not even the best hedge fund managers in the world can consistently beat the market long term.

I subscribe to the advice of Harold Pollack in his Investing Index card. It lines up with my experience from the few fixed income investing classes I took in business school (before I decided it wasn't for me) Essentially his research has shown that most people over-complicate their investments, do stupid things and take unnecessary risks, and everything the individual needs to know about investment can fit on an index card, and he proves it:

View attachment 137300

  • Max your 401(k) or equivalent employee controbution.
  • Buy inexpensive well-diversified mutual funds (I do index matching funds with a thousandth of a percent fee or less)
  • Never buy or sell an individual security. The person on the other side of the table always knows more than you do about this stuff.
  • Save 20% of your money
  • Pay your credit card balance in full every month
  • Maximize tax-advantaged savings vehicles like Roth SEP and 529 accounts.
  • Pay attention to fees. Always avoid actively managed funds. After fees are considered, they rarely beat the market.
  • Make any financial advisor you speak to commit to a fiduciary standard (in writing). Or better yet, don't use one at all.
  • Promote social insurance programs to help people when things go wrong.

(some emphasis and additions added by me)

If you want to not be a sucker just do the above, hold only extremely low fee index matching funds, set up an automatic balance to shift your investments between index matching funds so they compensate for each other.

Never do the following:
  • Never trust a financial adviser. Briefly Obama era legislation forced them to act as fiduciaries (legally bound to work to your maximized advantage), but that has now been reversed, and we are back to th epre financial crisis era, when they could just make your eyes glaze over with big words, and shift all your investments to what gives them the biggest commission, regardless of how good (or not) it is for you.
  • Never check your balance: It's just going to make you nervous and do something stupid (like move to money markets or buy gold when the market goes down)
  • Never move your money. If you cant afford to maximize your 401k contribution, start with the amount your company matches, and then increase it a percent or two every year when you get a raise and otherwise just forget it exists. If you are more than 10 years from retirement, you can ride out any market downturn.

The absolutely worst thing you can do is panic during a downturn and sell and buy something else (money markets, Gold, etc. etc.) If you do you have locked in your losses. Just patiently wait for the downturn to end, continuing to do what you've always done. Keep in mind, when you buy during a downturn with your regular paycheck contributions, that will be worth more later when the market goes up.

Keep doing this until ~10 years before retirement. Now it gets trickier, because now you don't have enough time to ride out a market downturn, and having to take money out of your 401k during a downturn is bad. You can't completely eliminate risk, but there are ways to reduce it. You can shift a percentage of your money to a bond fund and autobalance between bonds and stocks every month. (Bonds usually have lower returns, but they also tend to go up in value when stocks go down) Target 20-50% bonds depending on how risk averse you are. (higher percentage, more risk averse)

It just takes discipline. Never panic, never actively manage. Set it up, and just ignore it.

There are a lot of hot shots in the investing world who think they are better and smarter than every one else, and can continually beat the market. They are almost always wrong.
Click to expand...

Very good advice, though I don't have a problem if you are well off enough to have a small trading account and you want to buy some individual stocks you really like. As long as you don't use margin and keep the account small the worst that can happen is you lose it and learn the lesson the hard way!
 
Intel makes a profit and grows revenue, but not as much as was expected, so the stock price goes down. It reminds me of the "tech bubble" of the late 1990's when a company that had never turned a profit would record yet another quarter of loss, but since the loss wasn't as great as they expected, the stock prices went up.

Goodness, with the earnings at 1.12 per share, the current stock price of Intel makes a tempting long-term investment opportunity.
 
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