second-quarter earnings fell far short of expectations and the company provided a bleak outlook for the current quarter, hammering the stock.
Management of the chip maker blamed a deteriorating macroeconomic environment but said some of its woes were self-inflicted.
“This quarter’s results were below the standards we have set for the company and our shareholders,” said Intel CEO Pat Gelsinger in the news release. “We must and will do better. The sudden and rapid decline in economic activity was the largest driver, but the shortfall also reflects our own execution issues.”
The semiconductor company reported second-quarter adjusted earnings per share of 29 cents, less than half of the consensus estimate of 69 cents among analysts tracked by
Revenue came in at $15.3 billion, well below analysts’ expectations of $17.94 billion.
For the current quarter, Intel said revenue will be between $15 billion to $16 billion, far short of the consensus call of $18.72 billion. The company also gave a reduced full-year revenue range forecast of $65 to $68 billion, compared with the $74.5 billion Street estimate.
Intel shares fell as much as 9% initially following the release.
On the conference call, the company’s management said Intel’s data center business would grow slower than the overall market. Wall Street analysts and Barron’s have said the chip maker is likely to lose market share to its main competitor
Advanced Micro Devices
(AMD). The Intel CFO also said a “recessionary scenario” may materialize later this year and reduced the chip maker’s 2022 capital spending plans by $4 billion to $23 billion.
Demand for computers has been softening, reducing the need for chips. Worldwide shipments for personal computers fell 15% in the June quarter from a year earlier, IDC reported earlier this month. The research firm attributed the drop to “macroeconomic headwinds,” such as rising inflation and supply-chain disruptions.
Intel shares were down 23% this year as of Thursday’s close. For the same period, the
iShares Semiconductor ETF
(SOXX), which tracks the performance of the ICE Semiconductor Index, has declined about 26%.
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