The Words that Sunk Intel (INTC) Shares...
Intel (NASDAQ: INTC) announced better than expected results after the close Tuesday but the stock fell hard 10 minutes after the conference call began. This is what management said to snatch defeat from the jaws of victory:
"Overall, we are seeing a weak PC client business being offset by strong growth in the Data Center, memory and Internet of Things businesses. For the full year 2015, we expect the memory business to grow at a fast pace. Both the Data Center and Internet of Things businesses will also exhibit strong growth. But the annual growth rate for these businesses will be lower than expectations at the beginning of the year, as a result of weaker than expected macroeconomic growth.
We now expect the Data Center business to grow in the low double digits versus the prior forecast of approximately 15%. Relative to our forecast at the beginning of the year, we are seeing a weaker enterprise segment being partially offset by a stronger than expected cloud segment."
Christopher Rolland at FBR believes that "execution was generally solid, the strong stock surge into the print created an unreasonably high bar, which was missed, in our opinion, given the weaker DCG results and lowered guidance for that segment."
Ruben Roy’s thesis at Piper Jaffray remains unchanged, "Valuation is attractive. We expect INTC's profitability metrics to improve as Skylake production ramps and mobile losses decline. Despite lower DCG expectations for 2015, we expect ongoing growth in cloud and networking to offset temporary softness in enterprise."
Tim Arcuri from Cowen believes that "while some may argue CQ4 guide is at risk, we see more to like here than not and would get more aggressive all things equal on any pullback from these levels."
Chris Caso from Susquehanna finds "it difficult to get INTC earnings past $2.50 even under a highly favorable scenario, and we think that level of earnings power caps the stock in the mid-30s. We had been hoping for a better entry point and a more favorable stock setup for 2016. But we still haven’t gotten our wish, and we therefore remain on the sidelines."