Intel Shares Fall After Forecasting Weaker Guidance | Financial Buzz

Intel Shares Fall After Forecasting Weaker Guidance

Intel Corporation (NASDAQ: INTC) reported its first quarter financial results after the market close on Thursday. The chipmaker topped its quarterly estimates for both earnings and revenue, however, the Company reported a weaker-than-expected guidance, causing shares to fall by 9.44% on Friday morning.

For the first quarter, Intel reported earnings of USD 0.89 per share on revenues of USD 16.06 Billion. Refinitiv analysts expected earnings of USD 0.87 per share on revenues of USD 16.02 Billion.

Intel’s PC-centric unit reported revenues of USD 8.6 Billion, increasing by 4% year-over-year. The Company’s data-centric unit reported revenues of USD 7.39 Billion, falling down by 5% year-over-year.

Intel’s PC-centric unit saw stronger revenue due to a mix of the Company’s high-performance products and strength in the gaming, larger commercial and modem markets.

Data-centric revenue was primarily dragged down by a 6% decline in Intel’s Data Center Group unit. The segment reported revenue of USD 4.9 Billion for the quarter. Intel’s cloud segment grew by 5%, while the communications service provider segment fell by 4% and enterprise and government revenue slipped by 21%.

Within the data-centric unit, Intel saw declines across its memory business and programmable solutions group. However, Intel’s Internet of Things group and Mobileye reported revenue growth. IOTG grew by 8% year-over-year, while Mobileye grew by 38%, primarily led by continued customer momentum.

“The decline in memory pricing has intensified, the data-center inventory and capacity digestion that we described in January is more pronounced than we expected, and China headwinds have increased, leading to a more cautious IT spending environment,”  Intel Chief Executive Bob Swan said on the conference call said. “And yet those same customer conversations reinforce our confidence that demand will improve in the second half.”

Intel mentioned last week that the Company plans to exit the 5G smartphone market, giving Qualcomm (NASDAQ: QCOM) control of the market share. Moving forward, the Company said it is more geared towards Internet of Things devices.

For the second quarter, Intel said it expects adjusted earnings of USD 89 cents on revenues of approximately USD 15.6 Billion. FactSet analysts estimated earnings of USD 1.01 per share on revenues of USD 16.86 Billion.

As for the full year, Intel projects earnings of USD 4.35 per share on revenues of USD 69 Billion. Analysts forecasted earnings of USD 4.50 per share on revenues of USD 71.04 Billion. The lower-than-expected full-year revenue guidance would mark Intel’s first decline since 2015.

Intel shares are now up by 10.62% this year.