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(Reuters) – Chip maker Intel Corp on Thursday quashed its annual revenue forecast and missed analysts' estimates of first-quarter sales of its high-margin data center business, dropping shares of 7% after several hours.
The reduced revenue forecast for the full year adds to concerns that a slowdown in the entire sector could persist until the end of 2019 and following a similar warning issued earlier this week by chip maker Texas Instruments.
Intel slightly surpassed Wall Street's goals in terms of revenue and first-quarter profit, but data center group sales fell 6.3% to $ 4.90 billion , penalized by the weakness of China and a correction of stocks. Analysts expected a turnover of $ 5.10 billion, according to the company's financial analysis and data analysis FactSet.
The company has turned to the server chips it provides to data center operators to grow in recent years.
The chip maker has reduced its revenue forecast for 2019 to $ 69 billion, up from $ 71.5 billion that it had expected investors to anticipate when it last released its earnings in January.
"Looking ahead, we are taking a more cautious view of the year, although we expect market conditions to improve in the second half of the year," said Bob Swan, Chief Executive Officer.
A one-year trade war between China and the United States and the decline in smartphone sales have had adverse consequences on the global semiconductor industry. Investors are banking on the launch of the 5G telecommunication network and the demand for chips used in autonomous vehicles to boost growth.
Chip maker based in Santa Clara, Calif., Also announced $ 15.6 billion and 89 cents in earnings and earnings for the second quarter ending in June, while analysts forecast $ 16.85 billion $ 1.01 per share.
"The outlook for 2Q19 and AF19 is bad, because of weak macroeconomics, but we believe that there are still some hurdles, because of the increased competitive threat on the part of AMD between 2:19 and 2020, "said Kinngai Chan, an analyst at Summit Insights.
Net income fell to $ 3.97 billion, or 87 cents a share, in the first quarter, from $ 4.45 billion, or 93 cents from the previous year.
Excluding items, the company reported earnings per share of 89 cents, up from 87 cents, analysts say.
Intel's customer computing business revenue, aimed at PC manufacturers and the largest contributor to revenue, grew 4.45% to 8.59%. billions of dollars, exceeding FactSet's estimates of $ 8.38 billion.
Shares were trading at $ 53.33 trading after the bell.
(Report by Sayanti Chakraborty to Bengaluru and Stephen Nellis in San Francisco, edited by Sriraj Kalluvila)
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