Intel’s earnings forecast comes up well short, and stock tanks 11%


Share post:

Intel Corp.’s stock hasn’t seen a double-digit percentage decline in more than two years. But it might break that streak after a downbeat earnings forecast.

The company late Thursday issued an outlook for first-quarter adjusted earnings per share of 13 cents on revenue of $12.2 billion to $13.2 billion. Both forecasts came up well shy of the FactSet consensus: Analysts had been modeling 34 cents in adjusted EPS along with revenue of $14.3 billion.

“While we expect a slightly sub-seasonal first quarter from our core product businesses, we see material inventory corrections in Mobileye and PSG,” Intel
Chief Financial Officer David Zinsner said on the earnings call, referring to the Programmable Solutions Group.

Furthermore, the company anticipates “a significant drop in [Intel Foundry Services] revenue after seeing accelerated purchasing in our traditional packaging business and cyclical weakness in wafer equipment-buying in the first half of the year,” he continued.

Intel’s stock fell 10.9% in after-hours action Thursday. If such a decline carried through to Friday’s close, it would mark the stock’s worst single-day percentage decline since Oct. 22, 2021, when it fell 11.7%, according to Dow Jones Market Data. After that, the worst drop was an 8.6% plunge seen July 29, 2022.

The guidance miss comes as Intel’s stock has enjoyed a nice recent rally, surging about 50% since the company last posted results three months ago. The recent run in the share price “raised the bar on expectations,” an HSBC analyst wrote earlier this week.

Intel’s whiff on the outlook overshadowed better-than-expected results for the latest quarter, in which the company generated net income of $2.7 billion, or 63 cents a share, versus a loss of about $700 million, or 16 cents a share, in the year-prior period. On an adjusted basis, Intel earned 54 cents a share, while analysts were modeling 45 cents a share.

“We expect to unlock further efficiencies in 2024 and beyond as we implement our new internal foundry model, which is designed to drive greater transparency and accountability and higher returns on our owners’ capital,” Zinsner said in a release.

Revenue climbed to $15.4 billion from $14.0 billion, whereas the FactSet consensus called for $15.2 billion.

Read: Missed the boat on AMD’s stock surge? Why this analyst says you’re not too late.

Intel saw a 33% boost in revenue, to $8.8 billion, from its client-computing group, which is the company’s largest unit and the one that encompasses PCs. Analysts had been modeling $8.5 billion.

Don’t miss: Missed the boat on AMD’s stock surge? Why this analyst says you’re not too late.

Revenue from the data-center and artificial-intelligence group was down 10% to $4.0 billion, while analysts were looking for $4.1 billion.

The company’s network and edge business saw a 24% drop in revenue, to $1.5 billion, relative to a year before. That total matched the FactSet consensus.

Meanwhile, Mobileye revenue increased 13% to $637 million, and foundry services revenue jumped 63% to $291 million.

Don’t miss: Nvidia is no longer Morgan Stanley’s top chip pick. A much different name is.

Check out On Watch by MarketWatch, a weekly podcast about the financial news we’re all watching — and how that’s affecting the economy and your wallet. MarketWatch’s Jeremy Owens trains his eye on what’s driving markets and offers insights that will help you make more informed money decisions. Subscribe on Spotify and Apple.  

Source link

Alexandra Williams
Alexandra Williams
Alexandra Williams is a writer and editor. Angeles. She writes about politics, art, and culture for LinkDaddy News.

Recent posts

Related articles

Novavax failed to capitalize on fears surrounding mRNA vaccines, activist investor says

In a letter seen by MarketWatch, the activist fund blamed the sharp drop in Novavax’s sales on...

Fresh uncertainty around Fed rate cuts exposes the stock market’s winners and losers

Higher U.S. inflation is dashing investors’ hopes for multiple Federal Reserve rate cuts this year, while opening...

Shohei Ohtani not involved in gambling, prosecutors say, as they charge translator with stealing $16 million

Baseball star Shohei Ohtani was not involved in gambling and had no knowledge of payments being made...

Stocks, bonds slump as traders shift Fed rate-cut expectations to September

Markets were rattled Wednesday by a stronger-than-expected inflation report, with stocks and bonds selling off as investors...

Philips shares climb after finalizing pact with U.S. over device sales

Philips reiterated its financial outlook on Wednesday after finalizing a consent degree with the U.S. Department of...

GOP says Biden administration is using crypto as a ‘scapegoat’ for foreign-policy failures

The digital-asset industry and its allies in Congress on Tuesday criticized the Biden administration for blaming cryptocurrency...

States sue over Biden’s student-loan repayment program using arguments that succeeded before

Missouri and six other states are asking a court to block the Biden administration’s revamped student-loan repayment...

Congressional push to take TikTok off your phone may ‘be lost in the fog of presidential politics,’ Pence says

Senate Minority Leader Mitch McConnell and former Vice President Mike Pence are throwing their support behind a...