When Intel (INTC) posted a revenue plunge of 28.2% Y/Y to $14 billion, the stock fell by 10% in after-hours trade. The Q1 guidance is worse. Intel expects revenue of $10.5B to $11.5B, below the $14B consensus. Its 15-cent loss, also on non-GAAP, is nowhere near the 25-cent expected profit.
Intel posted a real GAAP EPS of negative 16 cents. It expects to lose 80 cents in Q1.
Intel has superior desktop processors, offering budget to premium products better than that of AMD (AMD). However, it spends $16 billion on dividends. CFO David Zinsner said it would cut $3 billion in spending to achieve $8 billion to $10 billion in spending by 2025.
Shares later recovered from the sell-off on Jan. 27. Intel is not in a financially dire situation. It generated $15 billion in CFFO. It has insignificant debt and continues to innovate. Its tardiness on product delivery will not take away from its $17 billion in annual research and development spending efforts.
Safe Dividend
Intel will pay its dividend again to imply a 4.85% yield. Shareholders should allow for a dividend cut afterward. The PC market remains weak. Intel’s data center market share recovery is still many months away.
