Intel Corp. shares plummeted as much as 9% in the extended session Thursday after the chip giant’s outlook fell way below Wall Street estimates, offsetting an earnings beat, and a decline in data-center revenue was worse than expected.
Intel INTC, -7.48% said it expects adjusted earnings of 89 cents a share on revenue of about $15.6 billion for the second quarter, while analysts polled by FactSet had forecast earnings of $1.01 a share on revenue of $16.86 billion. For the year, the chip maker sees adjusted earnings of $4.35 a share on revenue of about $69 billion. Analysts had forecast $4.50 a share on revenue of $71.04 billion.
“Looking ahead, we’re taking a more cautious view of the year, although we expect market conditions to improve in the second half,” Intel Chief Executive Bob Swan said in a statement. “Our team is focused on expanding our market opportunity, accelerating our innovation and improving execution while evolving our culture.”
The company reported first-quarter net income of $3.97 billion, or 87 cents a share, compared with $4.45 billion, or 93 cents a share, in the year-ago period. Adjusted earnings were 89 cents a share. Revenue declined to $16.06 billion from $16.07 billion in the year-ago quarter. Analysts had forecast adjusted earnings of 87 cents a share on revenue of $16.03 billion, according to FactSet.
Data-center revenue, however, declined more than expected, down 6% to $4.9 billion, when analysts were expecting a 2.5% decline to $5.1 billion, according to FactSet data.
“In the Data Center Group (DCG), the cloud segment grew 5% while the communications service provider segment declined 4% and enterprise and government revenue declined 21%,” Intel said in a statement.
Intel’s largest segment, client-computing, or traditional PC, rose 4% to $8.6 billion, while Wall Street forecast a rise of 1.9% to $8.38 billion from the year-ago period.
Nonvolatile memory solutions revenue fell 12% to $915 million, while Wall Street had expected a 9.4% decline to $942.1 million. On the other hand, “Internet of Things,” or IoT, revenue rose 8% to $910 million, while analysts had forecast a 6% decline to $789.5 million.
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Intel shares dropped about 9% in immediate after-hours trading, following a 1.9% decline to close the regular session at $57.61. In comparison, the PHLX Semiconductor Index SOX, -1.81% finished down 1.8%, breaking a six-session streak of record high closings.
Intel Corp. shares fell $4.56 (-7.92%) in after-hours trading Thursday. Year-to-date, INTC has gained 23.54%, versus a 17.09% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of MarketWatch.