business anticipated a first-quarter surprise loss and forecasted revenue $3 billion below projections as it also battled sluggish data center expansion.
The market capitalization of Intel Corp was reduced by approximately $8 billion on Friday as a result of the US chipmaker’s gloomy earnings forecasts, which stoked concerns about a downturn in the personal computer market.
The company anticipated a first-quarter surprise loss and forecasted revenue of $3 billion below projections as it simultaneously battled declining growth in the data center industry.
Shares of competing companies Advanced Micro Devices and Nvidia ended the session up 0.3% and 2.8%, respectively, while Intel’s shares closed 6.4% lower. Following its poor projection, KLA Corp, an Intel supplier, finished 6.9% lower.
Hans Mosesmann of Rosenblatt Securities, who was one of the 21 analysts to lower their price forecasts on the company, claimed that “no words can express or explain the historic collapse of Intel.”
The bleak prognosis highlighted the difficulties Chief Executive Pat Gelsinger faces as he attempts to restore Intel’s dominance of the market by boosting contract production and constructing new facilities in the US and Europe.
As a result of competitors like AMD using contract chipmakers like Taiwan’s TSMC to produce processors that surpass Intel’s technology, the corporation has been progressively losing market share.
According to Matt Wegner, an analyst at YipitData, “AMD’s Genoa and Bergamo (data center) chips offer a solid price-performance advantage compared to Intel’s Sapphire Rapids processors, which could drive additional AMD share increases.”
That disadvantages Intel, according to analysts, even when the data center industry recovers, which is anticipated to happen in the second half of 2022. By that time, the business would have lost even more market share.
Since the company’s original ambitions have shown to be unrealistic, it is now obvious why Intel needs to reduce costs so drastically, stockbroker Bernstein stated.
The extent of the decline is astounding, and it may eventually cause problems for the company’s cash position.
In the fourth quarter, Intel generated $7.7 billion in cash from operations and paid $1.5 billion in dividends. The company intends to reduce costs by $3 billion this year.
Analysts advised the corporation to think about reducing its dividend because capital expenditures are anticipated to be around $20 billion in 2023.
