Intel stock plunged around 16 per cent in after-hours trading after the US chipmaker issued a weaker than expected forecast for revenue and profit margins, breaking a run of strong earnings that had signalled a turnaround under CEO Lip-Bu Tan.
The company reported revenue of $16.5bn in the three months to September, in line with expectations, but forecast sales of between $15bn and $16bn for the current quarter, below the $17bn Wall Street anticipated. Intel also warned that gross margins would fall to a much worse than expected 37 per cent in the current quarter, citing higher costs from an industry-wide memory chip shortage.
Yesterday’s results marked a disappointment for Intel’s first earnings report after it issued $20bn of new stock in August, aiming to capitalise on a soaring share price following its fastest growth in 15 years in July. Chief executive Lip-Bu Tan said Intel was “moving with urgency” to unlock supply that will help boost chip sales, as the PC market suffered more than expected from component shortages.
Tan has led an effort to bolster Intel’s balance sheet after years of decline under his predecessor Pat Geldinger, driven by unchecked spending on manufacturing facilities that are yet to draw big external customers and compete with Taiwan’s TSMC.
Source: Financial Times Companies · Summarized by HeadlinesBriefing