Intel Hit as Consumers Flock to Lower-Cost Laptops, Datacenter Chips -- Update
October 22 2020 - 5:38PM
Dow Jones News
By Asa Fitch
Chip giant Intel Corp. raised its full-year outlook even as
earnings suffered as consumers gravitated to cheaper laptops and
demand for datacenters softened.
The company on Thursday said revenue dropped 4% to $18.3 billion
after it enjoyed strong sales in the first half of the year. The
company's bottom line also suffered, with earnings per share
falling to $1.02 in the period from $1.35 a year earlier and
falling short of Wall Street's expectation.
Intel's shares fell more than 10% in after-hours trading.
The company's growth has been principally in areas where prices
are lower, denting profitability, Intel Chief Financial Officer
George Davis said. "We saw much stronger PC demand in the consumer
and education side, which tends to be the more entry-level for PC
notebooks," he said.
Sales for the massive datacenters that companies, governments
and cloud-computing operators use fell 7% to $5.9 billion, the
company said, falling short of what analysts surveyed by FactSet
forecast. Revenue for the personal-computer focused business rose
1% to $9.8 billion. The company's memory division, most of which it
agreed this week to sell to South Korea's SK Hynix Inc. for $9
billion, also reported lower sales.
Although the results missed Wall Street's bottom-line forecast
of per-share earnings of $1.04, they beat the top-line projection.
Analysts projected sales of around $18.24 billion.
The company raised its full-year guidance, predicting its top
line would increase 5% this year and reach $75.3 billion, a record.
Intel now projects $4.55 in earnings per share for the year. It
previously forecast $75 billion in sales and $4.53 in earnings per
share.
"We're forecasting growth and another record year, even as we
manage through massive demand shifts and economic uncertainty,"
Chief Executive Bob Swan said in a statement.
Write to Asa Fitch at asa.fitch@wsj.com
(END) Dow Jones Newswires
October 22, 2020 17:23 ET (21:23 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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