Intel’s stock punished despite jump in profit
Intel Corp.’s profit leaped 51% as sales of microprocessors accelerated in the fourth quarter, but its shares plummeted on signs that the world’s largest semiconductor maker was feeling the pinch of an ailing U.S. economy.
The Santa Clara, Calif.-based company’s results, released after the market closed Tuesday, narrowly missed Wall Street’s profit and sales expectations.
Intel earned $2.3 billion, or 38 cents a share, in the three months ended Dec. 29, compared with $1.5 billion, or 26 cents, a year earlier.
Analysts polled by Thomson Financial were expecting profit of 40 cents a share.
Intel said it rang up $10.7 billion in sales during the latest quarter, a 10% improvement from $9.7 billion in the period a year earlier. But that was about $100 million short of what analysts expected.
The results jolted investors who thought the company was shielded from the housing and lending morass that has crimped consumers’ discretionary spending, analysts said.
Intel shares plunged more than 14%, falling $3.24 to $19.45 in after-hours trading after the results were released. During the regular session they had eased 39 cents, or 1.7%, to close at $22.69.
“The stock is reacting as hard as it is because the market was expecting Intel to be at the tail of the dog -- not really seeing the weakness we’re seeing in retail yet,” said Doug Freedman, an analyst with American Technology Research. “But the numbers at the top line suggest they are absolutely seeing this weakness.”
Intel Chief Executive Paul Otellini dismissed concerns that the company was hurt by slowed spending in the U.S., noting that three-quarters of Intel’s business came from outside the U.S. and the global personal computer industry appeared healthy.
However, Otellini added in a conference call with analysts, it would be “imprudent” not to be cautious about the economic pressures facing the U.S., a sentiment reflected in Intel’s latest financial guidance.
In the current quarter Intel expects revenue between $9.4 billion and $10 billion, within the lower end of the range of what analysts were expecting.
Intel is the world’s No. 1 maker of the microprocessors that act as the brains of personal computers, and its results are closely monitored by investors as a valuable gauge of the health of technology spending and PC demand.
