Intel drops on weak results for its data center group

Earnings

Intel CEO Robert “Bob” Swan announces the chip group’s new microprocessors called “Tiger Lake” at the technology fair CES in Las Vegas on Jan. 7, 2020.

Christoph Dernbach | picture alliance | Getty Images

Intel shares fell 10% in extended trading on Thursday after the company reported fiscal third-quarter earnings that were stronger than analysts had expected but showed new weakness in its data center business.

Here’s how the company did:

  • Earnings: $1.11 per share, adjusted, vs. $1.11 per share as expected by analysts, according to Refinitiv.
  • Revenue: $18.33 billion, vs. $18.25 billion as expected by analysts, according to Refinitiv.

Overall, Intel’s revenue declined 4% on an annualized basis, according to a statement.

The Data Center Group came up with $5.91 billion in revenue, down 7% and less than the FactSet consensus estimate of $6.21 billion. Intel said it saw weakness in sales to enterprises and governments, after two quarters of strong growth.

Intel’s largest business, the Client Computing Group that sells PC chips, produced $9.85 billion in revenue, up 1% year over year and above the $9.09 billion consensus among analysts polled by FactSet. Earlier this month technology research company Gartner estimated that PC shipments grew 3.6% in the third quarter, as people kept buying machines to work and study from home.

Intel’s Non-Volatile Memory Solutions Group had $1.15 billion in revenue, down about 11% and lower that the $1.50 billion consensus. On Tuesday South Korean memory maker SK hynix said it would buy part of that division, Intel’s NAND memory and storage business, for $9 billion.

With respect to guidance, Intel said it expects $1.10 in adjusted earnings per share on $17.4 billion in revenue in the fiscal fourth quarter. The revenue forecast implies a decline of about 14%. Analysts polled by Refinitiv had been looking for $1.07 in adjusted earnings per share and $17.36 billion in revenue.

In the quarter Intel announced the departure of engineering leader Murthy Renduchintala and said McKinsey executive Safroadu Yeboah-Amankwah was joining as chief strategy officer.

During the quarter Intel did not announce progress on its goal of increasing the ranks of women and minorities in leadership positions. The company last issued statistics in December, saying that 72.6% of its global employees were male and that 61.2% of U.S. employees were White or Asian.

Excluding the after-hours move, Intel share are down about 10% since the beginning of 2020, while the S&P 500 is up 7%.

Executives will discuss the results with analysts on a conference call starting at 5 p.m. Eastern time.

This is breaking news. Please check back for updates.

WATCH: CNBC’s full interview with Intel CEO Bob Swan

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