Does Intel’s Outlook Really Stink?

Intel (NASDAQ:INTC) reported its fourth-quarter and full-year 2012 results on Thursday after the bell. The stock spiked to close 2.58 percent higher immediately before the markets closed, but took a 5.2 percent slide after the report hit the wires because of weak expectations for 2013.

What Do the Numbers Look Like?Intel_Core_i7_logo_01

For the fourth quarter, the company reported revenues of $13.5 billion, a 2.8 percent drop from the same period last year. Net income fell 22.62 percent to $2.6 billion, or $0.48 per diluted share. Analysts were looking for net income of $0.45 per share and revenue of $13.53 billion.

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“The fourth quarter played out largely as expected as we continued to execute through a challenging environment,” said Paul Otellini, Intel president and CEO, in the earnings statement. “We made tremendous progress across the business in 2012 as we entered the market for smartphones and tablets, worked with our partners to reinvent the PC, and drove continued innovation and growth in the data center. As we enter 2013, our strong product pipeline has us well positioned to bring a new wave of Intel innovations across the spectrum of computing.”

On a GAAP basis, full-year revenue dropped 1.2 percent to $53.3 billion, while net income dropped 15 percent to just below $11 billion. The company’s full-year gross margin also fell 0.4 points to 62.1 percent.

What’s the Outlook Like?binocs

The company is looking for a single-digit percentage increase in revenue in 2013. First-quarter revenue is expected to come in slightly lower than the quarter in 2011 at $12.7 billion, and the company’s gross margin is expected to remain flat with its fourth-quarter margin at 58 percent. The company also expects to spend the same amount of money on M&A activity, about $4.6 billion.

Intel is looking to enter the year with a slightly more diversified base than it had in the past. Evidence of this comes with the company’s recent announcement that it would be partnering with Facebook (NASDAQ:FB) to “define the next generation of rack technologies that enables the disaggregation of compute, network and storage resources.” The project is aimed at developing technology to store and move massive amounts of data faster and cheaper than currently possible.

The company is also entering the retail solutions space, which Dell (NASDAQ:DELL), currently in the throes of possible privatization, has also decided to foray into. The move is just one more event in an ongoing trend of old-guard tech companies building a more robust set of revenue streams.

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