Intel Corp. withdrew its full-year sales forecast, citing \u201csignificant economic uncertainty\u201d caused by the Covid-19 pandemic. The company\u2019s shares fell more than 5% in late trading.<\/p>\n
The world\u2019s largest semiconductor maker reported a 23% jump in first-quarter revenue and better-than-projected profit, bolstered by demand for chips that run the laptops and server machines companies need to keep people working from home. Though it gave an optimistic second-quarter sales target, Intel\u2019s profit outlook fell short of estimates, sparking concerns that a spending slowdown will drag on business for the rest of 2020.<\/p>\n
Sales in the current period will be about $18.5 billion, the Santa Clara, California-based company said in a\u00a0statement\u00a0Thursday. Analysts estimated $18.08 billion on average, according to data compiled by Bloomberg. Net income will be about $1.04 a share, compared with Wall Street expectations of $1.11.<\/p>\n
\u201cInvestors were caught off guard\u201d by the profit forecast, Logan Purk, an analyst at Edward D. Jones & Co., said. \u201cWhen they\u2019re crushing it on the top line but whiffing pretty hard on the earnings, it\u2019s a shock.\u201d<\/p>\n
Companies have reacted to coronavirus shelter-in-place orders by buying more laptops to keep employees working remotely. At the same time, data-center owners have responded to a surge in video-conferencing, social-media use and movie streaming by stocking up on pricey Intel processors that run server machines. Those trends fueled a 14% increase in PC-related chip sales in the first quarter, and a 43% gain in the company\u2019s data-center division.<\/p>\n
Still, the soaring first-quarter sales fed into concerns that demand may have peaked early in the year, with Intel and its customers girding for the worst recession since the 2008 financial crisis. In the report, the chipmaker said it expects weaker demand from government and corporate clients in the second half of 2020.<\/p>\n
Revenue growth was strong in the quarter, but is \u201clikely not sustainable,\u201d said Morgan Stanley analyst Joseph Moore. While the factors behind a disappointing margin outlook were described as temporary, the company could face challenges in the second half of the year, he said.<\/p>\n
\u201cThe second half demand picture is more uncertain,\u201d Chief Executive Officer Bob Swan said during a conference call with analysts. For Intel\u2019s PC chip business, the economic slowdown will outweigh demand from the work-from-home trend, the company said. The data center division will benefit from continued chip purchases by large cloud providers, it added.<\/p>\n
The company suspended share repurchases in late March and did not reinstate buybacks on Thursday. It also sold $10 billion of debt recently to give itself a financial cushion if needed, Chief Financial Officer George Davis said in an interview following the results.<\/p>\n
\u201cAt some point we\u2019re going to see the recession start to impact demand for PCs,\u201d Davis told analysts on the conference call. Intel is already seeing the impact on automotive customers and the Internet-of-Things business, he added.<\/p>\n
Gross margin, or the percentage of sales remaining after deducting the cost of production, will suffer in the second quarter as Intel increases production of new chips. That will be reversed when those products go on sale in the second half, he said.<\/p>\n
First-quarter sales climbed to $19.8 billion, the chipmaker said. Analysts on average had predicted $18.83 billion. Net income was $5.7 billion, or $1.31 a share, compared with per-share estimates for $1.23. Gross margin, or the percentage of sales remaining after deducting the cost of production, widened to 60.6% in the quarter.<\/p>\n
Intel shares, which closed at $59.04 in New York, dropped as low as $55.26 following the earnings report. The stock is down about 1% for 2020.<\/p>\n
Intel Corp. withdrew its full-year sales forecast, citing \u201csignificant economic uncertainty\u201d caused by the Covid-19 pandemic.<\/p>\n","protected":false},"author":341034,"featured_media":232227,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[131,49045],"class_list":["post-349461","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-hardware","tag-intel","tag-sales-forecast"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/349461"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341034"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=349461"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/349461\/revisions"}],"predecessor-version":[{"id":349463,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/349461\/revisions\/349463"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/232227"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=349461"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=349461"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=349461"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}