Intel’s ‘Historic Collapse’. Intel saw about $8 billion spread off its market value later the U.S. chipmaker stumped Wall Street with dismal earnings plans, fanning fears around a fall in the personal-computer market.
The company predict a surprise loss for the first quarter and its revenue calculated $3 billion below estimates as it also fought with slowing growth in the data center business.
Intel shares closed 6.4% lower, whereas rival Advanced Micro Devices and Nvidia ended the session up 0.3% and 2.8%, compatibly. Intel supplier KLA established 6.9% lower later its dismal predict.
“No words can portray or explain the historic collapse of Intel,”
said Rosenblatt Securities’ Hans Mosesmann, who was among the 21 predictors to cut their price targets on the stock.
The deprived outlook highlighted the challenges facing Chief Executive Pat Gelsinger as he tries to restore Intel’s dominance of the sector by increasing contract manufacturing and building new factories in the United States and Europe.
The company has been gradually losing market share to competitors like AMD, which has used contract chipmakers such as Taiwan-based TSMC to make chips that overtake Intel’s technology.
“AMD’s Genoa and Bergamo (data center) chips have a strong price-performance advantage compared to Intel’s Sapphire Rapids processors, which should drive further AMD share gains,” said Matt Wegner, predictor at YipitData.
Intel’s ‘Historic Collapse’. Analysts said that puts Intel at a drawback even when the data center market bottoms out, likely in the second half of 2022, as the company would have lost even more share by then.
“It is now clear why Intel needs to cut so much cost as the company’s original plans prove to be fantasy,” brokerage Bernstein said.
“The magnitude of the deterioration is stunning, and brings potential concern to the company’s cash position over time.”
Intel, which plans to cut $3 billion in costs this year, created $7.7 billion in cash from operations in the fourth quarter and paid dividends of $1.5 billion.
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With capital expenditure valued to be around $20 billion in 2023, analysts said the company should study cutting its dividend.