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(Bloomberg) – Intel Corp. downgraded its sales guidance for the second quarter and year, thereby undermining the company's confidence that the demand for computer processors would increase as 2019 progresses. Shares fell at the end of the session.
Revenue for the current period will be about $ 15.6 billion and net profit will be 83 cents a share, the company based in Santa Clara, California, said Thursday in a statement. This compares with analysts' average estimates of $ 16.9 billion and 96 cents a share, according to data compiled by Bloomberg. Sales for the year will be $ 69 billion, Intel said, well below analysts' forecasts of $ 71.3 billion.
Chief Executive Officer Bob Swan, who stepped down from his position as CFO in January, is striving to extend a record-breaking set of results and withstand the thriving semiconductor competition that threatens the industry. Intel's dominance. The key to the company's financial health has been the demand from cloud computing vendors for chips used in servers, the most expensive and most profitable products from Intel. In the first quarter, this business declined 6.3%, recording a series of gains that fueled the company's overall growth as the personal computer market weakened.
Swan said Intel was facing "explosive growth" in 2018 and that its customers were working on their spare parts inventory.
"Last year, we experienced exceptional growth and were expecting a slowdown in the data center," he said in an interview after the report. "It will take a little longer than expected, but we are not moderating our medium and long-term view of data processing demand."
Intel's shares fell about 6.6% of extended deals following the announcement. Previously, they had slipped 1.9% to $ 57.61 in New York, leaving them up 23% this year. This performance is lower than the 35% increase in the Philadelphia Stock Exchange Semiconductor benchmark.
Sales in the first quarter were little changed, reaching $ 16.1 billion. Analysts had on average expected revenues of $ 16.03 billion. Net profit slipped to $ 3.97 billion, or 87 cents per share, compared to 82 cents for analysts. In the first quarter of last year, Intel had made a profit of $ 4.45 billion, or 93 cents.
The decline in the data center unit contrasts with 9% growth in the fourth quarter. In January, Intel executives predicted that orders would increase once customers had unused chips. Intel's Xeon processors account for more than 95 percent of the chip market running servers, machines that form the backbone of the Internet and corporate networks.
The company announced earlier this month that it was going to end a multi-billion dollar multi-decade effort to claim claims for the mobile phone industry. After Apple, a major Intel customer, announced plans to use Qualcomm Inc. for its iPhones, Intel announced plans to stop developing 5G smartphone chips and carry out an assessment of the opportunities available. by modems on personal computers and other devices.
Although the server market is more profitable, Intel still derives most of its revenue from the computer market and its processors are the main component of most of the world's laptops and desktops. The company posted sales of $ 8.59 billion in the first quarter, up 4.5% over the previous year. Shortages of some parts, caused by manufacturing problems in Intel's factories, have limited PC shipments in recent quarters. Swan said these shortages would continue throughout the first half of the year.
"Why are we still seeing processor shortages at Intel? Companies are still struggling to get processors," said Weston Twigg, an analyst at Keybanc Capital Markets Inc., referring to the Central Processing Unit. PCs. "Why are they leaving the window open to competitors to win shares?"
The company is struggling to adapt its network of factories to more advanced techniques. This leaves Intel and the IT sector short of production capacity. In response, the company has prioritized the manufacture of more expensive chips – server processors and high-end workstations – resulting in a shortage of supplies, especially for cheaper laptops.
Last year, Intel was worried about losing its manufacturing edge when the company confirmed that it would not produce a series of semiconductor devices manufactured with 10-nanometer technology until the end of this year. This could put it behind competitors like the Taiwan Semiconductor Manufacturing Co.
(Updates with the CEO's commentary in the fifth paragraph.)
To contact the reporter about this story: Ian King in San Francisco at [email protected]
To contact the editors in charge of this story: Jillian Ward at [email protected], Molly Schuetz
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