Intel Corp. shares haven't seen a double-digit percentage decline in more than two years. But it may break this line after pessimistic earnings expectations.
The company late Thursday issued a forecast for adjusted first-quarter earnings per share of 13 cents on revenue of $12.2 billion to $13.2 billion. Both forecasts came in just shy of the FactSet consensus: Analysts were modeling 34 cents in adjusted EPS on revenue of $14.3 billion.
“While we expect the first quarter to be slightly less seasonal than our core product businesses, we see material inventory corrections in Mobileye and PSG,” Intel INTC,
CFO David Zinsner said on the earnings call, referring to the suite of programmable solutions.
Furthermore, the company expects “a significant decline in… [Intel Foundry Services] He continued: “We are achieving our revenues after seeing the acceleration in purchasing in our traditional packaging business and the cyclical weakness in purchasing of chip equipment in the first half of the year.”
Intel stock fell 10.9% after hours on Thursday. If that decline continues into Friday's close, it would mark the stock's worst single-day percentage decline since Oct. 22, 2021, when it fell 11.7%, according to Dow Jones Market Data. After that, the worst decline was an 8.6% decline on July 29, 2022.
“We believe Intel shares are justifiably sold off after the pullback [first-quarter] Guidance that leaves us wondering when the company will find its footing as competitors take advantage of persistent server AI [capital-expenditure] “Cycle,” Wells Fargo analyst Aaron Ruckers wrote in a note to clients.
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This guidance miss comes as Intel shares have enjoyed a nice rally recently, up nearly 50% since the company last posted results three months ago. The recent rise in the share price has “raised expectations,” an HSBC analyst wrote earlier this week.
Intel's whiff overshadowed better-than-expected results for the latest quarter, with the company generating net income of $2.7 billion, or 63 cents per share, versus a loss of about $700 million, or 16 cents per share, in the fourth quarter. The period of the previous year. On an adjusted basis, Intel earned 54 cents per share, while analysts had expected 45 cents per share.
“We expect to unlock further efficiencies in 2024 and beyond as we implement our new internal foundry model, which is designed to deliver greater transparency, accountability and increased returns on our owners’ capital,” Zinsner said in a statement.
Revenue rose to $15.4 billion from $14.0 billion, while the FactSet consensus called for $15.2 billion.
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Intel saw revenue increase 33%, to $8.8 billion, from its Customer Computing Group, the company's largest unit that includes personal computers. Analysts were modeling $8.5 billion.
Revenue from the data center and artificial intelligence group fell 10% to $4.0 billion, while analysts were looking for $4.1 billion.
The company's network and edge business saw its revenue decline 24%, to $1.5 billion, compared to the previous year. This total is consistent with the FactSet consensus.
Meanwhile, Mobileye revenue rose 13% to $637 million, and foundry services revenue jumped 63% to $291 million.
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