After the chipmaker released second-quarter earnings and quarterly and full-year projections that fell short of analysts’ expectations, Intel shares dropped as much as 10% in extended trading on Thursday. According to a statement, Intel sales decreased by about 22% year over year in the quarter that concluded on July 2. According to Refinitiv statistics, revenue missed estimate by 14%, which was the biggest top-line shortfall for the corporation since 1999.
It had a net loss of $454 million at the end of the quarter as opposed to a net income of $5 billion in the same period last year. Gross margin decreased from 50.4 percent in the previous quarter to 36.5 percent. On a conference call with analysts, CEO Pat Gelsinger stated that “the sudden and rapid decline in economic activity was the largest driver of the shortfall but Q2 also reflected our own execution issues in areas like product design and the ramp of AXG [Accelerated Computing Systems and Graphics Group] offerings.”
Refinitiv’s poll of analysts had projected earnings of $3.42 per share and revenue of $74.34 billion. Although purchases of computers by small and medium-sized enterprises have decreased, the overall market has held up, according to David Zinsner, Intel finance head, in an interview with CNBC. However, the revised prediction takes into account economic difficulties that can cause businesses to postpone PC renewal cycles.