Today: Intel (INTC) beats earnings expectations in the fourth quarter, completes a year of declining revenues and profits and predicts little if any growth in 2014. Also: Cleantech stocks and LinkedIn spike as Silicon Valley stocks gain.
The Lead: Intel falls in late trading after reporting decline in annual revenues, profits
Intel generated more revenues and profits in the fourth quarter than it did in 2012, the Santa Clara chipmaker reported Thursday, but full-year results declined and forecasts for the current year are flat, leading to a falling stock price in after-hours action.
The world's largest chipmaker reported fourth-quarter profits of $2.6 billion, or 51 cents a share, on revenues of $13.8 billion, with profits gaining 6 percent and revenues advancing 3 percent from the same quarter a year ago.
"We had a solid fourth quarter with signs of stabilization in the PC segment and financial growth from a year ago," Intel CEO Brian Krzanich said in Thursday's news release.
Fourth-quarter growth couldn't make up the declining business Intel suffered the rest of the year, however. For the full year, revenues dropped 1 percent to $52.7 percent, and net profits declined 13 percent; Intel also suffered year-over-year declines in gross margin and operating income in 2013. The company does not expect its trajectory to change much this year, either, with forecasts pointing to flat revenues and a gross margin around 60 percent, similar to 59.8 percent in 2013.
The company's stock, which closed with a 0.5 percent decline to $26.54, fell more than 4 percent to less than $25.50 in after-hours trading as investors and analysts hoping Intel would increase its 2014 guidance from previous forecasts were disappointed.
"People were expecting them to beat and raise, and the guidance was just in line," Bernstein Research analyst Stacy Rasgon told Bloomberg News. "PCs are less bad -- that's not a reason to jump up and down."
The positive view of Intel's current financial situation is that it has reached the bottom, with the personal-computer market's deterioration coming to an end and beginning to head toward stability, at the worst, and growth in the rosiest scenarios. A series of positive analyst reports on Intel this week have espoused that view, most notably JPMorgan Chase analyst Christopher Danely, who made a self-professed "leap of faith" in changing his opinion on the company earlier this week.
"Intel's more realistic outlook on the PC market is a positive, as we have been saying that Intel needs to acknowledge and plan for the PC market not growing, and adjust its spending and resources," Danely wrote, while upgrading the company's stock to "Overweight," and increasing his price target from $20 to $29.
Krzanich, who took the helm of the company in 2013, has made mobile chips and leveraging its dominant foundry business a focus for increasing revenue generation while acknowledging that the PC industry is unlikely to present growth opportunities, the "realistic outlook" that Danely praises. Other analysts aren't as convinced in the strategy, however: Rasgon has an "Underperform" rating and $18 price target on Intel stock, and argued this week that the lower price Intel gets for mobile chips and lack of any foundry customers thus far means "the end game is not guaranteed."
Intel is the first major Silicon Valley technology company to release earnings for the fourth quarter of calendar-year 2013, which will give a full picture of the companies' performance for the year and form the basis of the annual SV150 rankings of the largest technology companies in the region in terms of revenues. Intel ranked No. 3 on the SV150 in 2013, but barely outpaced Google (GOOG), which made a major move by passing Silicon Valley stalwart Cisco (CSCO) and posting its first annual revenue total higher than $50 billion. Google seems headed higher than Intel, with revenues of $41 billion in the first three quarters of 2013 and expectations of nearly $17 billion in the fourth quarter.
SV150 market report: Cleantech, LinkedIn lead Silicon Valley stocks higher
Wall Street slowed down Thursday after two straight positive sessions pushed the Standard & Poor's 500 to yet another record high, but Silicon Valley tech stocks gained as the SV150's three cleantech companies cleaned up on Wall Street.
SolarCity had the sector's largest percentage gain Thursday, establishing record highs while gaining 12.1 percent to $76.80. The San Mateo solar installer received a thumbs-up from Deutsche Bank, which established analyst coverage of the company with a "Buy" rating and $90 price target a day after SolarCity established a new avenue for retail investment. "SolarCity is one of the pioneers in the residential solar leasing market and is poised to benefit from accelerating growth of distributed generation as retail electricity customers switch to solar," analyst Vishal Shah wrote. San Jose solar-panel manufacturer SunPower (SPWRA) also received a boost from a fresh analyst report, gaining 10.3 percent to $35.14 after JPMorgan Chase established coverage of the company with an "Overweight" rating and $38.50 price target. For the cleantech triple play, Tesla Motors (TSLA) jumped 4.2 percent to $170.97 as investors continued to process the Palo Alto electric car maker's announcement earlier this week of record profits. The one sour note for the sector Thursday was Silver Spring Networks, which gained 2.6 percent to $23.50 but preannounced a big earnings miss after trades were halted late in the session, and shares plummeted to $19 in after-hours trading.
The social-networking sector was uneven, highlighted by a surge from LinkedIn. The Mountain View professional-networking service jumped 6.7 percent to $230.56 after announcing a focus on China by stealing an executive from a Chinese Groupon rival to lead its efforts in the world's most populous country. Twitter continued its jagged trading pattern, dropping 1.6 percent to $60.57 after Hillside Partners analyst Rory Maher doubted the progress of its television efforts while the San Francisco microblogging company reportedly neared a deal to offer payments through its service. Facebook dropped 0.7 percent to $57.19 while continuing recent attempts to challenge Twitter in arenas where the younger challenger seems stronger, introducing trending topics to its offering and striking a television deal of its own, with NBC for the Winter Olympics.
Apple (AAPL) dropped 0.6 percent to $554.25 a day after big gains on optimism for its Chinese sales, as the Cupertino company was instructed to play nice with its antitrust monitor. Yahoo (YHOO) fell 1.8 percent to $21.54 after it chief operating officer was sent packing with a huge pay package, and eBay (EBAY) jumped 3.6 percent to $77.90 after an analyst predicted that the company would launch a new marketplace for brands to sell directly to consumers. San Jose's Tessera Technologies plunged 8.4 percent to $17.92 after laying off about a third of its employees and halving its business operations, and VMware gained 1 percent to $99.33 after an upgrade from Citi.
The SV150 index of Silicon Valley's largest tech companies: Up 3.13, or 0.2 percent, to 1,536.21
The tech-heavy Nasdaq composite index: Up 3.81, or 0.09 percent, to 4,218.69
The blue chip Dow Jones industrial average: Down 64.93, or 0.39 percent, to 16,417.01
And the widely watched Standard & Poor's 500 index: Down 2.49, or 0.13 percent, to 1,845.89
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.