Intel Hit as Consumers Flock to Lower-Cost Laptops, Datacenter Chips

By Asa Fitch 

Chip giant Intel Corp. raised its full-year outlook even as earnings suffered as consumers gravitated to cheaper laptops and demand for datacenters softened.

The company on Thursday said revenue dropped 4% to $18.3 billion after it enjoyed strong sales in the first half of the year. The company's bottom line also suffered, with earnings per share falling to $1.02 in the period from $1.35 a year earlier and falling short of Wall Street's expectation.

Intel's shares fell more than 10% in after-hours trading.

The company's growth has been principally in areas where prices are lower, denting profitability, Intel Chief Financial Officer George Davis said. "We saw much stronger PC demand in the consumer and education side, which tends to be the more entry-level for PC notebooks," he said.

Sales for the massive datacenters that companies, governments and cloud-computing operators use fell 7% to $5.9 billion, the company said, falling short of what analysts surveyed by FactSet forecast. Revenue for the personal-computer focused business rose 1% to $9.8 billion. The company's memory division, most of which it agreed this week to sell to South Korea's SK Hynix Inc. for $9 billion, also reported lower sales.

Although the results missed Wall Street's bottom-line forecast of per-share earnings of $1.04, they beat the top-line projection. Analysts projected sales of around $18.24 billion.

The company raised its full-year guidance, predicting its top line would increase 5% this year and reach $75.3 billion, a record. Intel now projects $4.55 in earnings per share for the year. It previously forecast $75 billion in sales and $4.53 in earnings per share.

"We're forecasting growth and another record year, even as we manage through massive demand shifts and economic uncertainty," Chief Executive Bob Swan said in a statement.

(END) Dow Jones Newswires

October 22, 2020 16:53 ET (20:53 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.