Get 40% Off
🤯 Perficient is up a mind-blowing 53%. Our ProPicks AI saw the buying opportunity in March.Read full update

Intel shares dip on CFO's unsettling comments, future of chip foundry venture uncertain

EditorRachael Rajan
Published 09/20/2023, 04:39 PM
© Reuters.

Shares of semiconductor giant Intel (NASDAQ:INTC) fell by 4.5% on Wednesday, following disquieting remarks made by the company's CFO, David Zinser, at the Innovation Conference held on Tuesday. Zinser indicated that Intel is more than a year away from reaching a break-even point in operating cash flow, a statement that came as a surprise given the company's ongoing efforts to revitalize its chip business.

The CFO also shed light on the declining revenue from Intel's data center unit, its second-largest business as per S&P Global Market Intelligence data. Despite expectations of recovery, this unit has been underperforming for the past two years.

In response to these disclosures, Investment bank Morgan Stanley stated on Wednesday morning that they were not entirely unexpected. However, Citigroup (NYSE:C) analyst Christopher Danely expressed concern in a report released early Wednesday. According to Danely, Intel's new guidance falls short of Wall Street analysts' consensus forecast, hinting at a possible earnings shortfall for the company.

Danely drew attention to Zinser's mention of only "modest" improvements in profit margins for Intel this quarter. The analyst voiced doubts about Intel's attempts to establish a chip foundry business - manufacturing computer chips designed by other firms - and predicted such an endeavor would not generate significant profits for Intel.

Currently, neither Morgan Stanley nor Citigroup recommends buying Intel stock; both rate it as neutral. Furthermore, Danely from Citigroup advises Intel to abandon its chip foundry venture.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Latest comments

I think just 2 days ago it was a buy because of chips for AI were going to increase growth and revenue, who bought on that news??
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.