Technology
Friday, January 26th, 2024 6:08 pm EDT
Key Points
- Intel’s Steep Stock Decline Following Disappointing Forecast: The primary focus of the article is on the significant decline in Intel’s shares, which plummeted by 12% on a Friday, marking the most substantial drop since July 2020. This sharp decline followed the release of Intel’s forecast for the current quarter, which fell significantly short of analysts’ expectations. Despite beating projections for profit and revenue in its earnings report the previous Thursday, Intel’s forecast for adjusted earnings of 13 cents per share on sales between $12.2 billion and $13.2 billion failed to meet the anticipated earnings of 33 cents per share on $14.15 billion in revenue, as per LSEG.
- Discrepancy in Revenue Guidance and Analyst Estimates: The article underscores the discrepancy between Intel’s revenue guidance for the first quarter and the estimates of analysts. Notably, Intel’s revenue guidance for the first quarter was reported to be below every analyst’s estimate, based on CNBC research. This disparity contributes to the overall negative market reaction to Intel’s performance, leading to the significant drop in its stock value.
- Intel CEO’s Explanation and Focus on Core Businesses: The article includes insights from Intel CEO Patrick Gelsinger, who addressed analysts on an earnings call. Gelsinger attributed the anticipated first-quarter sales hit to weaknesses in Mobileye, where Intel holds a majority stake, and the company’s programmable chip unit. Despite acknowledging this setback, Gelsinger reassured analysts that Intel’s core businesses, specifically PC and server chips, remained “healthy.” He stated that these core businesses would report sales at the low end of the seasonal range, emphasizing that the drivers of the incremental weakness were largely outside of Intel’s core PC and data center CPU segments. This perspective is highlighted as a point of encouragement by Deutsche Bank analyst Seymour Ross in his note on the situation.
Intel shares experienced a significant decline of 12% on Friday, marking the steepest drop since July 2020. The downturn followed Intel’s issuance of a forecast for the current quarter that fell far short of analysts’ expectations. In its earnings report on Thursday, Intel exceeded projections for profit and revenue, but the chipmaker’s outlook for the current quarter disappointed, with adjusted earnings expected to be 13 cents per share on sales ranging from $12.2 billion to $13.2 billion. Analysts had anticipated earnings of 33 cents per share on $14.15 billion in revenue. Notably, Intel’s revenue guidance for the first quarter was below every analyst’s estimate. While certain segments of the semiconductor industry are thriving due to robust demand for artificial intelligence chips, other areas, including the central processing units (CPUs) produced by Intel, lack similar momentum.
The consensus analyst estimates for Intel’s earnings in the second, third, and fourth quarters of 2024 all experienced a decline following the disappointing forecast. Intel CEO Patrick Gelsinger attributed the anticipated first-quarter sales hit to weaknesses in Mobileye, where Intel holds a majority stake, and the company’s programmable chip unit. Despite this setback, Gelsinger reassured analysts that Intel’s core businesses, particularly PC and server chips, remained “healthy” and were expected to report sales at the lower end of the seasonal range. While the substantial miss in the forecast is viewed as a negative development, some analysts, such as Deutsche Bank’s Seymour Ross, expressed a degree of encouragement, noting that the drivers of the weakness were primarily outside of Intel’s core PC and data center CPU segments. As of Friday afternoon, Intel shares were trading at $43.68, representing a 13% decline for the year following a nearly doubling of the stock in 2023.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/01/26/intel-on-pace-for-worst-day-since-2020-on-weak-outlook-.html
