Intel forecasts gloomy quarter on supply-chain woes, shares fall

The Intel Company brand is seen on a show in a retailer in Manhattan, New York Metropolis, U.S., November 24, 2021. REUTERS/Andrew Kelly

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April 28 (Reuters) – Chipmaker Intel Corp (INTC.O) forecast second-quarter income and revenue under Wall Road expectations on Thursday on worries of weak demand in its largest market, PCs, and elevated supply-chain uncertainty as a consequence of COVID-19 lockdowns in China.

Shares of the corporate fell 5% in after-market buying and selling.

Rising inflation, resurgence of COVID-19 in China and uncertainties across the struggle in Ukraine have shifted shopper spending away from devices, hurting Intel. Greater than half of its income final 12 months got here from the section promoting processors for PCs.

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“We predict that Shanghai does open up pretty quickly, however that does reasonable our outlook a bit of bit on Q2,” Intel Chief Govt Pat Gelsinger advised Reuters. “It would not change any perspective on the 12 months, which we predict as we go into the second half, you have got extra PC demand.”

The primary quarter beats assist Intel meet its full-year income outlook, he added.

As lockdowns in China proceed, supply-chain bottlenecks are prone to harm Intel’s prospects, in flip affecting the chipmaker’s enterprise.”We predict Intel nonetheless has to show they’ll meet steering targets earlier than the inventory receives full credit score for a powerful information,” mentioned Logan Purk, analyst at Edward Jones.

Analysts say the PC market is coming off of searing charges of progress during the last two years as distant working and studying triggered excessive demand through the pandemic.

Income at Intel’s Shopper Computing Group, which provides PC makers and is the biggest contributor to the corporate’s income, fell 13% to $9.3 billion within the first quarter.

The corporate expects current-quarter adjusted revenue of 70 cents per share on income of about $18 billion, under analysts’ common estimate of 83 cents per share on $18.38 billion, in line with IBES knowledge from Refinitiv.

Intel can also be going through rising competitors within the knowledge middle house, as friends Nvidia Corp (NVDA.O) and Superior Micro Gadgets (AMD.O) are ramping up their chip manufacturing to cater to the booming market amid progress within the metaverse, AI purposes and cloud computing.

Income from Intel’s higher-margin knowledge middle and AI enterprise rose 22% to $6 billion within the reported quarter.

Nevertheless, adjusted income for the primary quarter was $18.4 billion, in contrast with analysts’ common estimate of $18.31 billion.

On an adjusted foundation, Intel earned 87 cents per share, above expectations of 81 cents.

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Reporting by Chavi Mehta, Eva Mathews and Sonia Cheema in Bengaluru and Jane Lanhee Lee in Oakland, Calif.; Modifying by Krishna Chandra Eluri and Richard Chang

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