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Earnings Results: Intel stock declines as chip maker doubles down on outlook despite headwinds

Intel Corp. shares dropped in the extended session Thursday after sales at the chip maker’s major businesses and its forecast for the current quarter came in below Wall Street expectations.

Intel
INTC,
+3.58%

shares fell as much as 5% after hours, following a 3.6% gain in the regular session to close at $46.84.

Intel reported first-quarter net income of $8.11 billion, or $1.98 a share, compared with $3.36 billion, or 82 cents a share, in the year-ago period. After adjusting for acquisition-related expenses and other items, Intel reported earnings of 87 cents a share, compared with $1.34 a share from a year ago.

Revenue declined to $18.36 billion from $19.67 billion in the year-ago quarter. Excluding the company’s divested memory business, the company reported revenue of $18.6 billion in the year-ago period.

Analysts expected adjusted earnings of 78 cents a share on revenue of $18.33 billion, based on Intel’s forecast of 80 cents a share and revenue of about $18.3 billion.

Read: Why semiconductor stocks are ‘almost uninvestable’ despite record earnings amid a global shortage

“With a $1 trillion market opportunity ahead of us, we remain laser focused on our IDM 2.0 strategy,” said Intel Chief Executive Pat Gelsinger in a statement. “We executed well against that strategy in Q1, delivering key product and technology milestones and announcing plans to expand our manufacturing capacity in both the U.S. and Europe to meet the continued demand for semiconductors and drive a more balanced, resilient global supply chain.”

Revenue in the important data-center category rose 22% to $6 billion, but below the Street’s estimate of $6.78 billion. Revenue from client computing, the traditional PC group, fell 13% to $9.3 billion, below Wall Street’s estimate of $9.42 billion.

In the first quarter, Intel reported gross margins 53.1% on a non-GAAP basis from 58.8% a year ago. Intel had forecast margins of 52% for the first quarter back in January.

Read: The end of one-chip wonders: Why Nvidia, Intel and AMD’s valuations have experienced massive upheaval

Intel forecast second-quarter earnings of about 70 cents a share on revenue of about $18 billion and adjusted gross margins of 51%. Analysts on average expect adjusted second-quarter earnings of 80 cents a share on revenue of $18.34 billion.

“Intel delivered strong first-quarter financial results, and we are reaffirming our full-year revenue guidance,” said Chief Financial Officer David Zinsner in a statement.

Read: The pandemic PC boom is over, but its legacy will live on

Intel expects earnings of about $3.60 a share on revenue of about $76 billion, while analysts forecast $3.37 a share on revenue of $74.88 billion.

Over the past 12 months, Intel stock has fallen 18%. Over the same period, the Dow Jones Industrial Average  
DJIA,
+1.85%

— which counts Intel as a component — has gained less than 1%, the PHLX Semiconductor Index 
SOX,
+5.58%

 has declined nearly 4%, the S&P 500 index 
SPX,
+2.47%

  has gained nearly 3%, and the tech-heavy Nasdaq Composite Index 
COMP,
+3.06%

 has fallen more than 8%.

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