Intel Corp. (INTC) is giving back Thursday's gains and then some after its earnings release missed already-tempered earnings estimates.
The semiconductor sector leader reported fourth quarter revenue at $18.7 billion and full-year revenue at $70.8 billion, which both marked significant misses on analyst estimates. However, earnings per share came in at $1.28, beating estimates for $1.22 for the fourth quarter, providing a positive.
The company also said it expects revenue of $16 billion on earnings of 87 cents per share in the first quarter of 2019, well below Wall Street's anticipated guidance of $17.3 billion and earnings of $1.01 per share.
"This may be the best read in one place that an investor can make into the health of the semiconductor industry as a whole," Real Money contributor Stephen "Sarge" Guilfoyle wrote in his column. "Chip stock performance underscores the health of almost everything else. If chip stocks are cold, business spending itself is cold. In fact, if chip stocks are cold, the consumer, him or herself, is probably cold as well."
The next quarter is certainly beginning to look chillier as shares of the Santa Clara-based semiconductor leader plummeted 7% after hours on the news.
Of particular worry is the Data Center Group revenue, which came in at $6.1 billion in revenue for the fourth quarter, below the already tempered target of $6.35 billion. The lack of demand indicates the slower demand from data center driven sectors like cloud providers, suggesting a broader slowdown read through.
Doug Kass warned that the sector's hot rise on the back of earnings results from Xilinx (XLNX) and a less-bad-than-expected forecast from Texas Instruments (TXN) smelled funny in a diary post Thursday afternoon.
He argued that many were caught up in the momentum driven trade.
"We should once again learn from the dramatic drop in share prices of former market darlings," he said as the sector soared in afternoon trading. "Resist the temptation of the consensus and "Group Stink" and recognize the value of being a contrarian."
One positive that might help investors after feeling the whiplash was at least the news that the dividend will increase in 2019.
"Looking ahead, we are forecasting another record year and raising the dividend based on our view that the explosive growth of data will drive continued demand for Intel products."
The dividend boost will mark a 5% increase to $1.26 per-share on an annual basis and bolster the defensive characteristic of the company.
Still, the company will need to maneuver a myriad of issues that the release dives into and will also likely be punished for remaining non-committal on finding a new CEO to steer the rocking ship.
Additionally, the press release and company statement did not address issues related to the trade war at all nor did it indicate competition risks.
To follow the call as management tries to address these issues and warm up investors after a colder than expected earnings, click here.