“This quarter’s results were below the standards we have set for the company and our shareholders,” said CEO Pat Gelsinger. “We must and will do better.
Updated at 8:18 am EST
Intel (INTC) – Get Intel Corporation Report shares p[lunged lower Friday after the chip maker posted much weaker-than-expected second quarter earnings, while cutting its full-year sales forecast, amid a pullback in demand for laptop and desktop computers.
Intel’s adjusted bottom line for the June quarter was pegged at 29 cents per share, well shy of Street forecasts of 70 cents, as revenues fell 22% to $15.3 billion thanks to weakness in the computing group.
Client computing revenue fell 25% from last year to $7.7 billion, Intel said, with little overall support from its Data Center and AI division, where sales fell 16% to $4.6 billion. Network and Edge Group sales were down 11% to $2.3 billion.
Current quarter sales, Intel added, would likely range between $15 billion and $16 billion, again missing analysts’ forecasts. For the year, Intel clipped its revenue forecast to between $65 billion and $68 billion, as softening demand, supply chain disruption and run-away inflation continue to hammer PC demand.
“This quarter’s results were below the standards we have set for the company and our shareholders,” said CEO Pat Gelsinger. “We must and will do better. The sudden and rapid decline in economic activity was the largest driver, but the shortfall also reflects our own execution issues.”
Intel shares were marked 11.4% lower in pre-market trading to indicate an opening bell price of $35.18 each, a move that would extend the stock’s year-to-date decline to around 31.7%.
“Perhaps our largest overarching concern, aside from the details of the quarter and the negative outlook, is the degree of lost, or at least shaken, confidence that we and the Street must be dealing with when considering how comfortable we can be listening to, or counting on, any of Intel’s optimistic views for its expectations of a seasonally stronger end of the year,” said Benchmark analyst Cody Acree, who carries a ‘hold’ on Intel stock following last night’s earnings.
Acree said Intel’s focus on the lower-end PC market, as well as its lagging position in data center, accelerated by late-stage flaws in its Saphire Rapids processor family, highlighted the group’s execution failures over the past quarter.
“While Intel is working to address these issues, we question how long before the fixes can be impactful, even if the company might be able to count on help from improved seasonal demand for PCs in the December quarter,” he added.
