Intel shares crater as analysts point out 'stunning' deterioration
JHVEPhoto/iStock Editorial via Getty Images

Intel (NASDAQ:INTC) shares plunged nearly 10% Friday after the semiconductor giant reported weak fourth-quarter results and issued a shocking forecast for the first-quarter, leaving many on Wall Street to question whether the dividend is safe.
Bernstein analyst Stacy Ragson, who has an underperform rating on Intel (INTC), called the level of deterioration for the financial results "stunning" and became concerned for the company's cash position.
"It is now clear why Intel needs to cut so much cost as the company's original plans prove to be fantasy," Ragson wrote in a note to clients. Ragson said the magnitude of Intel's (INTC) deterioration is so large that it "brings potential concern to the company's cash position over time, in our opinion."
Ragson went on to add that with Intel (INTC) likely to start burning through cash, "it seems reasonable to think that investors should at least start thinking about the security" of the chip giant's dividend payments.
Looking to the first quarter of 2023, Intel (INTC) expects to lose 15 cents a share, excluding one-time items, with revenue forecast to be between $10.5B and $11.5B. The company also expects gross margins to fall below 40%, coming in at 39%.
Analysts expect the company to earn 25 cents a share, on $13.96B in sales, and gross margins of 45.5%. 
KeyBanc Capital Markets analyst John Vinh said the results from the PC and data center went from "bad to worse," as AMD (AMD) continues to take market share.
Vinh said that after "undershipping" sales in the PC sector by 10% in 2022, Intel (INTC) expects that gap to widen in the first quarter of this year, and also see "incremental weakness" in its data center business across areas like the enterprise and China.
"While no full-year guidance was provided, [Intel] sees the [first-half] correction will be followed by a [second-half] recovery," Vinh said. "We expect 2023 will be another challenging year with limited catalysts."
AMD (AMD) and Nvidia (NVDA) fell 1.8% and 1.2%, respectively, in early trading on Friday on back of Intel's (INTC) results.
BMO Capital Markets analyst Ambrish Srivastava was particularly negative in his assessment on Intel's (INTC) financial health and the guidance.
"Whatever the reason, and however compelling it might be, a company of Intel's stature should know better than to spring a surprise such as materially lowering depreciation," Srivastava wrote in a note to clients. Srivastava lowered his 2023 estimates, as he now sees earnings of 35 cents per share for the full year, down from a previous forecast of $1.80 a share, and expects negative free cash flow of $14B, down from a prior view of negative $3B. 
Deutsche Bank analyst Ross Seymore, who has a hold rating on Intel's (INTC) stock, said the poor results were "more than macro," as the Pat Gelsinger-led company continues to impose pain on itself. 
"We agree that macro [economic issues] are the primary driver of this shortfall," Seymore said. "We cannot ignore the Intel-specific dynamics exacerbating this pain," such as overly confident revenue outlook and hiring in 2022 and data center roadmap issues.
"Overall, we sympathize with Intel's (INTC) challenge of executing a multi-year and expensive turnaround in the midst of a macro [and] semi[conductor]-cycle downturn," Seymore said, adding that Intel's (INTC) first-quarter guidance "may very well mark the long-awaited financial 'bottom'".
Still, Seymore said, "The shocking depth of that 'bottom' is likely to feed investor doubts regarding both the probability and timing of any transformative structural rebound." 
Earlier this month, Intel's (INTC) Gelsinger said the company was still in talks with Italy to build a fab in the country but was talking to other European countries as well.
Meanwhile, Seeking Alpha contributors such as Stone Fox Capital said that when it comes to what Intel (INTC) reported on Thursday, "You were warned."