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Intel shares plummet after server warning

by on23 October 2020

Things are not looking good in Chipzilla’s universe

Intel shares fell by ten percent after-hours trading after the chip company reported its third quarter results, which show it losing ground in the server and data centre market.

The cocaine nose jobs of Wall Street had predicted that Intel would report an adjusted $1.11 in per-share profit, which was down 22 percent from the year-ago period. They also expected it to report revenues of $18.26 billion in Q3, down a more modest five percent compared to the year-ago Q3.

While Intel did better than that making a $18.3 billion, and met earnings-per-share estimates of $1.11, on an adjusted basis the devil was in the detail.

Intel reported a weakness in the company data-focused business unit, the smaller of Intel's two halves - the other focuses on PC chips.

The data-side of Intel, its Data Centre Group (DCG) which should have been coining it in had mixed results. While it had cloud revenue growth of 15 percent DCG "Enterprise & Government" business shrank 47 percent compared to the year-ago period, following what Intel described as "two quarters of more than 30 percent growth".

Off that weakness, the resulting top line miss was sharp, with the market expecting $6.22 billion in revenue and DCG only delivering $5.9 billion.

Intel blamed COVID-19 for the weak economics conditions at play in the result but that is a little strange given that other cloud and data centre businesses grew during the same period. The company also highlighted COVID-19 when it discussed results from its internet of things business and memory operation, which declined 33 percent and 11 percent on a year-over-year basis.

Last modified on 23 October 2020
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