Stocks to sell

Sometimes, you just have to let go of a thesis when it’s proven wrong. Stubborn investors might try to average down on microprocessor manufacturer Intel (NASDAQ:INTC) stock.

That’s not a wise move to make, though, as even the company’s management had to acknowledge challenging market conditions. If you’re only in it for the dividend payouts, don’t assume that Intel’s distributions will be your saving grace.

It’s such a shame to witness the deterioration of a once-mighty chipmaking giant. Intel used to be a headline grabber, but few folks are truly excited about this year’s “Innovation” conference.

That’s because Intel has lost its mojo, its competitive edge. Other chipmakers, both domestically and abroad, have taken the mantle of market leader from Intel. This lackluster performance is reflected in the share price, which has been cut in half this year. How much worse can it get? The evidence says: much, much worse.

The Dreadful Price Action of INTC Stock

Every time people tried to “buy the dip” with INTC stock this year, they ended up disappointed. Helplessly, they watched the share price dwindle from $56 to $27 in just a matter of months.

“But, I collected dividends along the way,” loyal Intel investors might say. Sure, there were distributions in the past, but this doesn’t guarantee future payouts.

Remember, Intel ceased to be a profitable company in the most recently reported quarter. Also, Intel’s GAAP-measured revenue slumped 22% on a year-over-year basis.

Intel’s investors shouldn’t count on the company maintaining its dividend payments if the revenue is diminishing and the company’s not even profitable anymore. Besides, dividends can only do so much; they haven’t made up for massive share-price losses this year.

Intel CFO’s Warning Should Deter Investors

The personal computer or PC market is crucial to Intel’s business as a chipmaker. Unfortunately for Intel, along with the company’s other problems, it also has to deal with a PC market that’s in trouble.

Intel’s management acknowledged this not long ago when the company revealed its expectation that the total addressable market for PCs would decline 10% this year.

Yet, as dire as this forecast was, Intel CEO David Zinsner took it a step further. He admitted that the PC market has “deteriorated further” than the previous 10%-decline guidance.

It’s possible that Intel CEO Pat Gelsinger had this in mind when he said, “it’s pretty rough out there,” at a conference call not long ago. Gelsinger further warned that business may be a “little bit worse” since Intel provided quarterly earnings guidance in July.

Given the seemingly downbeat mood among Intel’s management, it shouldn’t be too surprising that Bernstein analyst Stacy Rasgon issued an “underperform” rating on INTC stock. This makes sense since Intel’s CFO apparently expects the PC market to underperform.

What You Can Do Now

Frankly, this is no time to be a hero. Going bottom-fishing with INTC stock and expecting the dividend payments to save you from financial ruin would be a self-destructive mission.

It’s tough to be the bearer of bad news, but the thrill is gone for Intel. The company’s management doesn’t seem to have robust expectations. The shareholders are frustrated, and Intel’s precarious dividend payments might not last much longer.

All in all, there’s no need to invest in this company as it’s simply a money-losing proposition.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.