Why did Intel shares fall 8.8% after the sales report?
Intel (INTC) shares fell by 8.75% in the postmarket on Thursday after the company reported financial sales results for the 3rd quarter of 2021, which ended on October 2.
Intel shares have grown by 12.4%, but they have fallen by 5.47% six months. The chart shows strong stock growth in the first quarter, followed by a sharp drop in April, including a weak report for the 2nd quarter.
Investors were encouraged by the arrival of new CEO Pat Gelsinger and his plans to build two new chip manufacturing plants, including for third-party companies.
However, with expansion and investments in new technologies by reducing profits, Intel strives for world leadership in producing chips under challenging times. Intel’sIntel’s competitors have taken away part of the market share; there is a shortage of semiconductors, chips, and components in the world.
During a report on Thursday, Intel warned its investors that its gross profit and free cash flow would decline to a lower level over the next 2-3 years, as the company intends to invest $20 billion. For the construction of new factories in Arizona, research and development of microchips.
Intel reported an increase in earnings per share for the 3rd quarter to $1.17, which is more than the market analyst’s estimate of $1.11.
Gross profit during the quarter was 56%, an increase of 2.9% compared to the same period last year.
Total revenue fell to $18.1 billion, lower than Wall Street’s estimate of $18.24 billion. Intel quarterly revenue and profit statistics.
Revenues of Intel’sIntel’s largest division, including sales of PC chips, fell by 2% compared to last year to $9.7 billion. The company said a shortage of components hampered laptop sales, but higher average prices partially offset this.
The segment’s revenues, including sales of chips for data centers, increased by 10% to $6.5 billion but did not reach analysts’ analysts’ forecasts of $6.66 billion.
Sales of the Internet of things Group division showed strong growth of 54% to $1 billion. A subsidiary of Mobileye, which sells car chips, reported a 39% increase in sales to $326 million.
Given the growing demand for processors, market analysts and investors welcome Intel’sIntel’s desire to become a contract manufacturer for other companies. As a result, Gelsinger believes that the volume of the semiconductor industry will double over the next ten years.
However, this is an expensive initiative that will take several years. As a result, the company relies on partial cost coverage through government support in the United States and Europe. Intel also received a signed contract from the US Department of Defense.
Gelsinger believes that the demand for PCs is still high, but the problems of semiconductor shortage and supply-demand imbalance will not end until 2023.
In the 4th quarter, Intel expects sales of $18.3 billion. – above analysts analyst’s estimates of $18.24 billion.
Intel raised its profit forecast for the year from $4.80 to $5.28 per share gross profit forecast for 2022 from 56.5% to 57%. The company expects gross profit to be between 51% and 53% over the next two to three years, and then it will grow.
According to Intel’sIntel’s forecast, in 2022, revenue will be about $74 billion, and the cumulative annual growth rate will be from 10% to 12% over the next four to five years. Analyst’s forecasts for revenue for the full year 2022 are $73.1 billion.
The company said that Chief financial officer George Davis plans to leave Intel in May 2022 and that the company will look for a successor.
