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Intel Q4 increases year-over-year weren't enough to impress investors

Intel was on a roll during latter half of 2007. During Q3 2007, Intel reported a 15 percent increase in revenue to $10.1 billion USD, a 64 percent increase in operating income to $2.2 billion USD and a 43 percent increase in net income to $1.9 billion USD.

Intel mirrored those gains again with some pretty competitive numbers during Q4 2007. Revenue, operating income and net income increased to $10.7 billion USD, $3 billion USD and $2.3 billion USD respectively. Intel's Q4 2007 earnings represented a 10.5 percent, 105 percent and 51 percent increase respectively over its Q4 2006 results.

"2007 was a breakthrough year for innovation at Intel. We realized the benefits of our investments in new products and our efforts to drive efficiencies," said Intel president and CEO Paul Otellini. "Our customers embraced the Intel Core microarchitecture, extending our competitive leadership and driving a significant gain in operating results. We enter 2008 with the best combination of products, silicon technology and manufacturing leadership in our history."

Despite Intel's gains from Q4 2007, investors still hammered the company for missing analysts' estimates for the company. Intel's revenues of $10.7 billion USD and earnings per share (EPS) of 38 cents were below analysts' estimates of $10.84 billion USD and 40 cents.

Investors also weren't encouraged by Intel's Q1 2008 forecast. Intel projects that revenue for the quarter will come in at between $9.4 billion USD and $10 billion USD with gross margins coming in at 56 percent plus or minus 2 points.

Intel's stock tumbled 12 percent following the Q4 earnings report.

Intel had its fair share of news in the past few weeks. The company recently launched 16 new processors, severed its ties with the OLPC project and came under fire from the European Union for antitrust allegations.

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Stupid Analysts
By Master Kenobi (blog) on 1/16/2008 11:12:26 AM , Rating: 3
quote:
Intel's revenues of $10.7 billion USD and earnings per share (EPS) of 38 cents were below analysts' estimates of $10.84 billion USD and 40 cents.

The fact is that these analysts are humans. They make predictions in advance based on models and formulas. So what if a company barely missed it. Oh noes, I didn't earn what the anaylst at Wall Street said I would, well I will sell this and try a different one.

Shame nobody has tried to sue Wall Street for these constant predictions that regularly seem to set the bar for a company and when it's not met, the companies pay the price. Sounds pretty unfair for some analyst to tell these excutives what their revenue bar is. Then again, the investors that listen to these analysts are just as dumb. Everyone still seems to subscribe to the get rich quick philosophy on wall street.




RE: Stupid Analysts
By Frallan on 1/16/2008 11:44:06 AM , Rating: 1
Well I think you are right to blast the analysts :0)

However i would like to know how much of the increase (in all posts) was from exchange rations. The dollar is down to almost 50 cents on a Euro now. Which means that the real win might be Way lower then it seems measured in USD.


RE: Stupid Analysts
By Adonlude on 1/16/2008 1:39:15 PM , Rating: 2
I read that 2.5c of EPS loss was attributed to expected losses in dumping their NOR memory business. I tend to think of one time charges such as this as being not quite as bad as acutally having lower earnings due to normal operation. It seems the market doesn't really agree.

Ive been in Intel at $24 for quite awhile. Sold half my stake at $27 and just bought it back at $20. I think they will make it back into the mid 20's within a year.


RE: Stupid Analysts
By TomZ on 1/16/2008 1:10:51 PM , Rating: 2
Look at it another way - if the analysts were always right, there would be far fewer real investment opportunities. The fact that they are wrong nearly as often as they are right gives lots of people the ability to make money off of their mistakes.

For example, some might have the opinion that right now Intel is oversold - so that might be a buying opportunity - created largely because the analysts had too high of expectations.


RE: Stupid Analysts
By Christopher1 on 1/16/2008 5:35:11 PM , Rating: 1
Wrong nearly as often as they are right? Try wrong MUCH MORE often than they are right.


RE: Stupid Analysts
By clnee55 on 1/20/2008 8:49:45 PM , Rating: 2
Definition of Financial Analyst: He who can explain everything about financial matter, stock price...but only after it happens.

quote:
Wrong nearly as often as they are right? Try wrong MUCH MORE often than they are right.


RE: Stupid Analysts
By deeznuts on 1/16/2008 1:11:45 PM , Rating: 5
It's not just missing analysts' predictions (which are based off of Intel's guidance). If Intel had a problem with the estimates they can issue revised guidance figures. Fact of the matter is, Intel missed estimates, ended up in the bottom half of their own guidance range (which in financial conditions as our current one is bad) and reduced outlook for this quarter and the year.

With fears of a slowdown and/or recession, this is what gets the stock hammered. The company doesn't really pay the price (investors who bought at the top usually do, though). These estimates are priced into the stock normally. So at the risk of oversimplifying, the company enjoyed a run up in stock price due to the estimates somewhat. Now it's just correcting. Of course in this market environment everything is overcorrecting.


RE: Stupid Analysts
By amanojaku on 1/16/08, Rating: -1
RE: Stupid Analysts
By ghost101 on 1/16/2008 1:30:36 PM , Rating: 2
The 40 cents figure is referring to earnings per share rather than $1xxxxxxxxxxxxxx.40

Otherwise $10840000000.40 looks really suspicious.


RE: Stupid Analysts
By TomZ on 1/16/2008 1:31:32 PM , Rating: 2
The "40 cents" referrs to the analysts' estimates for earnings per share.


RE: Stupid Analysts
By amanojaku on 1/16/08, Rating: -1
RE: Stupid Analysts
By Adonlude on 1/16/2008 1:52:30 PM , Rating: 2
EPS is the simplest way to measure company earnings for the individual investor. That $20 share of Intel earned $0.38 this quarter for the company. Not to be confused with a dividend which is the amount of money the share earned for you. Intel paid an $0.11 dividend per share during the same period so of that $0.38 earnings on that $20 share, $0.11 went to you and $0.27 went into Intels coffers to pay employees and advance the company.


RE: Stupid Analysts
By dcalfine on 1/17/08, Rating: 0
RE: Stupid Analysts
By ghost101 on 1/16/2008 1:57:24 PM , Rating: 2
Its a shame that you're completely wrong. The post almost sounded poignant.

Take a basic finance course. Seriously.


RE: Stupid Analysts
By Adonlude on 1/16/2008 2:05:27 PM , Rating: 2
To criticize without providing the correct answer is kind of... lets see, what smart sounding vocabulary word can I use here even though doesn't really apply... how about poignant.


RE: Stupid Analysts
By ghost101 on 1/16/2008 2:20:36 PM , Rating: 3
Well i posted after the above posters. Some have explained whats relevant to this article. But the original post demonstrated a clear lack of understanding on how shares are priced. The theories that need to be learnt for that, is beyond what a comment can do.

Hence the finance course.

My post was not meant to be taken as aggressive in anyway. It was supposed to be in a joking tone.


RE: Stupid Analysts
By Master Kenobi (blog) on 1/16/2008 2:30:09 PM , Rating: 2
Missing expectations by .02 per share, call me crazy but I'm looking at the "Earned .38 per share". The fact that the estimate was .02 higher and they missed it, isn't so much of a big deal. I stand by my earlier statement that many of these investors on wall street are of the "get rich quick" variety.


RE: Stupid Analysts
By ghost101 on 1/16/2008 5:34:59 PM , Rating: 2
It is when youve incorporated that estimate into what you are willing to pay for the stock. Potentially, this could have a compounded effect on all future returns Intel may post. Past returns only have a bearing on the market capitalisation price as far as how this may affect future returns.

Analysts may have a complicated formula for calculating the price of Intel stocks, and future prices. Maybe plugging in this revised EPS, world economy variables and outlook for the tech sector, showed that the stock has been massively overvalued. I do not know, and you do not know. You have no evidence to make your claim.

If you feel the drop is unwarranted, then go ahead and buy Intel shares/options. Get a job as a trader at an ibank and try to make your bank millions. However, if you did the latter you wouldnt necessarily hold on to your belief so strongly. Evidence may force you to reconsider, it may even stregthen what you already think. But then, itll be on your head. At the end of the day the people that matter (the people who trade shares) are held accountable. They have no incentive to react like this without justification.


RE: Stupid Analysts
By EricMartello on 1/16/2008 5:55:09 PM , Rating: 2
Sounds to me like you are saying there might be some inherent...RISK...when you purchase stock in a company as an investment. Yeah, it would be nice if you could cover your ass 100% regardless of whether the company performs to expectations or not.

The simple fact of the matter is, many people on Wall Street trading stocks are jaded and quite out of touch with anything beyond their own little world. I fully agree that most of them are greed-driven, and want to make as much money as possible in the shortest amount of time. In fact, if that is NOT your goal you will probably fail on Wall Street.

As far as risk goes...if you can't take the heat then don't play the game. There are much safer ways to make money, albeit you won't make as much.


RE: Stupid Analysts
By Ringold on 1/17/2008 9:53:28 AM , Rating: 2
There are hordes of investors with time horizons on the scale of months, even 2-3 years. They're not all just day-traders.. They're the ones on the other side of some of this trading, picking up shares of all variety of beaten-up companies (like some financials) that may be down further in the short term but unless the universe implodes will be higher a year or so from now.

And then there are billions of dollars that just flow in to S&P500 and similar index funds, wanting to reap that relatively reliable, safe 10% long term annnualized gain, with a time horizon of potentially 20-50 or more years.