Intel stock fell 10% after data-center sales fell more than expected

A previous version of this report projected an inaccurate Wall Street revenue consensus estimate. It has been improved.

Intel Corp reported third-quarter earnings on Thursday afternoon.

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Intel Corp data-center sales exceeded expectations in the third quarter, with shares declining 10% in after-hours trading.

Intel INTC,
+ 0.74%
Profit and revenue declined from the previous year, while full-year forecasts for its fourth-year sales outlook but missing expectations were slightly raised. The stock fell below $ 49 in action immediately following the report, which closed with a 0.8% gain at $ 53.90 after closing the regular session.

The chipmaker reported net income of $ 4.3 billion, or $ 1.02 per share, in the third quarter, up 28% to $ 5.99 billion, or $ 1.35 per share, from the year-ago period. After adjusting for restructuring and acquisition-related costs, Intel reported earnings of $ 1.11 per share, up from $ 1.42 per share in the year-ago quarter. Revenue declined to $ 18.3 billion from $ 19.19 billion in the year-ago quarter.

Analysts polled by FactSet estimated adjusted revenue of $ 1.11 on revenue of $ 18.24 billion, while Intel estimated adjusted income of $ 1.10 on revenue of approximately $ 18.2 billion.

The company said it now expects adjusted earnings of $ 4.90 on sales of $ 75.90 billion, previously stating $ 4.85 a share on sales of $ 75 billion.

“Our teams delivered solid third quarter results that exceeded our expectations despite the epidemiological impacts in key segments of the business,” Chief Executive Officer Bob Swan said in a statement. “Nine months into 2020, we are forecasting growth and another record year, even as long as we manage through huge demand changes and economic uncertainty.”

In Intel’s previous earnings report, the company announced that it was delaying its next-generation 7-nanometer chips by at least the end of 2022, a chip architecture that already rivaled smaller rival Advanced Micro Devices Inc. AMD Was released by
+ 0.27%
Earlier in the year. While falling behind AMD in the process, the chipmaker has also seen Nvidia Corp. NVDA,
Move beyond this in market capitalization, as graphics-chip experts create a knack for ARM Holdings PLC that could make it more as Intel’s perfect competitor.

For more: How did Intel lose its Silicon Valley crown?

Intel’s data-center group, which is being challenged by AMD’s server efforts, saw a 7% to $ 5.9 billion drop in revenue, while analysts were expecting $ 6.21 billion. Intel’s largest segment – the client-computing, traditional PC group – grew 1% to $ 9.8 billion with increased PC demand, with analysts expecting $ 9.09 billion.

Intel reported that non-volatile memory solutions revenue dropped 11% to $ 1.2 billion, while Wall Street expects $ 1.5 billion. Earlier in the week, Intel said it was selling its flash-memory, or NAND, to Korean chipmaker SK Hynix Inc. for $ 9 billion.

“Internet of Things,” or IoT, revenue fell 33% to $ 677 million, compared to $ 777.8 million. Mobileye’s revenue grew 2% to $ 234 million, while Street expected $ 158.5 million.

For the fourth quarter, Intel generated revenue of $ 17.4 billion and earnings per share of $ 1.10. Analysts, on average, estimate adjusted earnings of $ 1.07 and $ 18.24 billion per share in the fourth quarter.

For the year, Intel shares are down nearly 10%, while the Dow Jones Industrial Average DJIA,
+ 0.54%
– which counts Intel as a component – is down 1%, the S&P 500 index SPX,
+ 0.52%
7% up, and the tech-heavy Nasdaq Composite Index comp,
+ 0.18%
28% up.


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