Intel must face a reduction in profits when the effort to turn around begins

Intel has comfortably exceeded Wall Street expectations in its last quarter because of strong computer sales during the pandemic as they make up most of the land lost as a result of weaker demand for data centers. figures they were released late Thursday.

Despite lower expectations for the full year this year, U.S. manufacturers ’shares lagged 3 percent in post-market trading as Wall Street’s profit margins and capital expenditures increased as the ground for an attempt to turn around consolidated.

The results are the first for new CEO Pat Gelsinger, who set an ambitious plan last month Intel it was at the forefront of chip manufacturing, while also proposing a new strategy to become a “foundry” chip for manufacturing for other companies.

He made a big early traction in the foundry business on Thursday and told analysts that more than 50 potential customers had already shown interest.

However, Intel predicted that gross profit margin would fall below 55 percent this year, historically compared to levels of about 60 percent, and said capital spending would be $ 20 billion, up from $ 14.3 billion last year.

Margins have been this year with higher reliance on lower-margin computers and costs to increase 10nm process technology along with the company’s initial 7nm delayed technology costs. The decline in margins in the first quarter, with a proform gross profit margin falling by more than 6 percentage points, led to a shift in lower-yielding products and greater competition in the data center market, according to US chip Patrick Moorhead. analyst.

Sales in the first quarter were resilient supply restrictions which have weighed heavily on the industry in recent months, as well as ways in which AMD rivals have been able to enter the CPU market as a result of Intel’s slippage.

Intel said its computer division’s revenue rose 8 percent to $ 10.6 billion, and data center customer revenue fell 20 percent to $ 5.6 billion.

With the huge demand for home computers caused by the closure of offices and schools in the pandemic, 2021 is “becoming the largest computer market ever,” with unit sales up 30 percent in some markets in the first quarter. he said. Global computer sales had more than 350m in 2012, before falling below 260m in 2018, jumping from 300m last year.

Some analysts insisted that in recent years the company has become a major driver of growth in terms of falling data center sales. Intel executives said the decline reflected the short-term pace of spending by large-scale cloud companies as they “digest” recent chip purchases, and said the business will return to growth as the year progresses.

Excluding the $ 1.1 billion in revenue from the Nand memory business in the process of character sold to SK HynixIntel reported revenue of $ 18.6 billion in the last quarter, unchanged from the previous year.

The pro-form gain, especially before the jury’s patent in a lawsuit against the company in the last trial, resulted in a $ 2.2 billion charge, which resulted in a $ 1.39 share.

Wall Street expected revenue of $ 17.8 billion and earnings of $ 1.15 per share. Based on formal accounting principles, Intel’s net income fell 41 percent to $ 3.4 billion, and its earnings per share fell 37 percent to 82 cents.