Please try another search
© Reuters. Visitors are seen at the Intel booth during the China Digital Entertainment Expo and Conference, also known as ChinaJoy, in Shanghai, China July 30, 2021. REUTERS/Aly Song
By Aditya Soni and Nivedita Balu
(Reuters) - Intel Corp (NASDAQ:INTC) saw about $8 billion wiped off its market value on Friday after the U.S. chipmaker stumped Wall Street with dismal earnings projections, fanning fears around a slump in the personal-computer market.
The company predicted a surprise loss for the first quarter and its revenue forecast was $3 billion below estimates as it also struggled with slowing growth in the data center business.
Intel shares closed 6.4% lower, while rival Advanced Micro Devices (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA) ended the session up 0.3% and 2.8%, respectively. Intel supplier KLA Corp settled 6.9% lower after its dismal forecast.
"No words can portray or explain the historic collapse of Intel," said Rosenblatt Securities' Hans Mosesmann, who was among the 21 analysts to cut their price targets on the stock.
Graphic 1: Intel predicts its worst quarter since dot-com bubble after disaster quarter Intel predicts its worst quarter since dot-com bubble after disaster quarter, https://www.reuters.com/graphics/INTEL-STOCKS/gdvzqwzrzpw/chart.png
The poor outlook underscored the challenges facing Chief Executive Pat Gelsinger as he tries to reestablish Intel's dominance of the sector by expanding contract manufacturing and building new factories in the United States and Europe.
The company has been steadily losing market share to rivals like AMD, which has used contract chipmakers such as Taiwan-based TSMC to make chips that outpace Intel's technology.
"AMD's Genoa and Bergamo (data center) chips have a strong price-performance advantage compared to Intel's Sapphire Rapids processors, which should drive further AMD share gains," said Matt Wegner, analyst at YipitData.
Graphic 2: AMD set to overtake Intel in market cap, again AMD set to overtake Intel in market cap, again, https://www.reuters.com/graphics/INTEL-STOCKS/INTEL-STOCKS/klpygzxkmpg/Intel-AMD.jpg
Analysts said that puts Intel at a disadvantage even when the data center market bottoms out, expected in the second half of 2022, as the company would have lost even more share by then.
"It is now clear why Intel needs to cut so much cost as the company's original plans prove to be fantasy," brokerage Bernstein said.
"The magnitude of the deterioration is stunning, and brings potential concern to the company's cash position over time."
Intel, which plans to cut $3 billion in costs this year, generated $7.7 billion in cash from operations in the fourth quarter and paid dividends of $1.5 billion.
With capital expenditure estimated to be around $20 billion in 2023, analysts said the company should consider cutting its dividend.
Graphic 3: Intel's spending to claw back share hurts margins, https://www.reuters.com/graphics/INTEL-STOCKS/znvnbzyzwvl/chart.png
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.