By Intel and Sonam Rai and Stephen Nellis
The company's shares fell 6.7 percent in expanded trading as the news further stoked fears of an industry slowdown after sales warnings from Apple Inc, Samsung Electronics Co. Ltd and Taiwan Semiconductor Co Ltd earlier this month pointing to stagnating
These fears had picked up shortly earlier this week with better-than-expected quarterly results from Texas Instruments Inc., Xilinx Inc. and Lam Research Corp. However, Intel's weaker demand from China has hurt the company's data center chip business, which has driven growth in recent years, In the interview, Intel Interim Chief Executive Bob Swan said the data center providers tend to make big purchases in spurts and then spend time digesting the chips as they build out of their centers.
Sales in China fell because some buyers there – especially cloud computing vendors – seem to have bought chips earlier than usual last year because of fears about US-China trade tensions, Swan said. U.S. Pat. cloud computing vendors continued their usual purchasing patterns throughout the year, he added.
"I believe there has been an earlier purchase of server-type products in the second and third quarter of last year, "Swan said. "But overall I would say … the prospects and health of the industry are as bright as they've ever been."
That digestion period could last until the second half of this year, when Intel's management said it expects data center growth to pick up again. "For years, Intel had been insulated from swings in Apple's iPhone supply chain because it was not a major supplier," said Stifel analyst Kevin Cassidy to Reuters. . But it was the sole provider in 2018 of iPhone modems, which connect phones to wireless data networks, and earlier this month, Apple cut its revenue forecast, citing a weak demand in China
Swan said Intel's modem business grew by 60 percent over last year but still came in about $ 200 million below target. The modem unit had "a fantastic growth but weaker than we expected, and as a result we have impacted our revenues for the quarter," said Swan.
Intel forecasts first-quarter revenue of $ 16 billion and adjusted earnings of 87 cents per share . Analysts have been expecting revenue of $ 17.35 billion and a profit of $ 1.01 per share, according to IBES data from Refinitive.
"The macro environment does not look good at the moment and if it gets worse, Intel could see a further downside to its outlook, "said Kinngai Chan, an analyst with Summit Insights Group
Intel's search for a permanent CEO has lasted six months. Last June, then-CEO Brian Krzanich resigned after a probe of a relationship with another Intel employee
"I am convinced the board will close on a new CEO in the near future, and I believe the management team, myself and the 107,000 employees will rally behind him or her to take this company as a whole new level, "Swan said on a conference call with investors. "In the meantime, we will not be distracted by the void."
Fourth quarter revenue in the high-margin data center business came in at $ 6.07 billion, below expectations of $ 6.35 billion, according to FactSet's financial and data analytics firm .
Revenue in the business computing business, which includes sales to PC makers, was $ 9.82 billion, missing FactSet estimates of $ 10.01 billion.
<p class = "canvas-atom canvas-text Mb ) – sm Mt (0.8e) – sm "type =" text "content =" Intel reported https://bit.ly/2FN4ac0 net income of $ 5.20 billion, or $ 1.12 per share, for the fourth quarter ended Dec. 29, compared with a loss of $ 687 million, or 15 cents per share, a year earlier. " data-reacttid = "40"> Intel reported https://bit.ly/2FN4ac0 net income of $ 5.20 billion, or $ 1.12 per share, for the fourth quarter ended Dec. 29, compared with a loss of $ 687 million, or 15 cents per share, a year earlier.
Net revenue rose to $ 18.66 billion from $ 17.05 billion, but missed estimates of $ 19.01 billion.