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Weak Intel outlook fears fears of slowing chips



By Sonam Rai and Stephen Nellis

(Reuters) ̵

1; Intel Corp. forecasted revenue and earnings for the current quarter below analyst estimates and missed fourth-quarter revenue estimates on Thursday from a slowdown in China and slacking demand China affected data centers and modem chips.

The company's shares fell 6.7 percent in extended trading as news continued to upset fears of a slowdown in the industry following the sell-offs by Apple Inc., Samsung Electronics Co Ltd and Taiwan Semiconductor Co Ltd earlier this month stagnation indicated smartphone demand and a slowdown in the Chinese economy.

These concerns had been lifted earlier this week and the quarterly results of Texas Instruments Inc., Xilinx Inc. and Lam Research Corp. were better than expected. But after Intel's report on Thursday, the rivalries were low Advanced Micro Devices, which reports results for next Tuesday, and Nvidia Corp declined.

Intel said that weaker demand from China's company's data center chip business is impacting driven growth in recent years as PC sales slowed and cloud-based services became more popular.

In an interview, Intel Interim head Bob Swan said data center vendors typically make big purchases and then "spend time digesting." "The chips were expanding their centers."

China declined as some buyers – especially cloud computing vendors – bought chips earlier than usual because of fears over US-Chinese trading tensions, while US cloud computing vendors continued their usual buying behavior

"I think there used to be server products in the second and third quarters of last year (among Chinese cloud customers)," said Swan. "But overall, I would say … the outlook and health The industry is as shiny as ever. We're in a digestive phase right now. "

This digestive period could last until the second half of this time, as Intel's management expects data center growth to accelerate." We believe cloud companies are focused on optimizing the data center. " Focused data centers, "said Stifel analyst Kevin Cassidy to Reuters.

Intel had been immune to fluctuations in Apple's iPhone supply chain for years because it was not a large supplier, but in 2018 this was the only provider of iPhone modems connecting phones to wireless data networks Apple had lowered its sales forecast earlier this month due to weak demand in China.

Swan said Intel's modems business grew 60 percent last year however, they were still around $ 200 million below target, with the modems unit reporting "a fantastic wac but it was weaker than we expected. This had an impact on our quarterly revenues, "said Swan.

Intel predicted $ 16 billion in revenue in the first quarter and an adjusted profit of 87 cents per share. Analysts expected revenue of $ 17.35 billion on average. Dollar and a profit of $ 1.01 per share, as shown by the information of IBES of Refinitiv.

"The macro environment does not look good at the moment, and if it deteriorates, Intel could detect another disadvantage "Kinngai Chan, Analyst at the Summit Insights Group, said [Intel's search for a permanent CEO lasted six months.] Last June, then-CEO Brian Krzanich resigned after investigating a relationship with another Intel employee. [19659015] "I am confident that the board will close a new CEO in the near future, and I believe that the management team, myself and the team will be 107,000 employees he will gather him to take this company to a whole new level, "said Swan in a conference call with investors. "In the meantime, we will not be distracted by the void."

High-margin data center revenue was $ 6.07 billion below $ 6.35 billion in the fourth quarter, according to financial and data analyst firm FactSet

Client Computing Turnover Business, which includes sales to PC makers, was $ 9.82 billion, and FactSet's $ 10.01 billion estimate was missing. The quarter ended December 29 ended in the fourth quarter, compared to a loss of $ 687 million or 15 cents per share in the previous year.

Net sales increased from $ 17.05 billion to $ 18.66 billion, but estimated $ 19.01 billion.

Excluding exposure, the company generated $ 1.28 per share, exceeding expectations of $ 1.22.

(Report by Sonam Rai in Bengaluru and Stephen Nellis in San Francisco, edited by Sriraj Kalluvila, Richard Chang and Tom Brown)


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