(Bloomberg) — Intel Corp., the largest maker of processors for personal computers, fell in late trading after giving a weak forecast for the current period, indicating it is still struggling to return to the top spot in the chip industry.
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Second-quarter sales will be about $13 billion, the company said in a statement Thursday. That compares to an average analyst estimate of $13.6 billion, according to data compiled by Bloomberg. Earnings will be 10 cents per share, minus some items, compared to a projection of 24 cents.
The outlook indicates that CEO Pat Gelsinger’s efforts to revitalize Intel will take more time and money. Once the world’s dominant chipmaker, the company has lagged behind rivals such as Nvidia Corp. and Taiwan Semiconductor Manufacturing Co. in terms of revenue and technological know-how.
Shares of Intel fell 7.2% in extended trading after the report was released. The stock had already fallen 30% this year through the close, making it the second worst performer in the Philadelphia Stock Exchange semiconductor index.
In the first quarter, the Santa Clara, Calif.-based company posted earnings of 18 cents per share, excluding certain items, and revenue of $12.7 billion. Analysts had estimated earnings of 13 cents per share and revenue of $12.7 billion.
The chipmaker reports earnings for the first time under a new business structure that shows the financial performance of its manufacturing operations. Gelsinger said this approach was a necessary step to make operations more efficient and competitive. Intel has also developed a foundry business, which manufactures components for outside companies on a contract basis.
Read more: Intel suffers worst drop in two months on pessimistic outlook
Earlier this month, the company gave investors a first look at the financial status of its factory network. It was not encouraging. Spending on new factories has led to increasing losses, and Intel doesn’t expect the company to break even for several years.
Intel Foundry, the new division responsible for manufacturing, reported revenue of $18.9 billion in 2023, up from $27.5 billion the year before. The unit had revenue of $4.4 billion in the first quarter of 2024.
The foundry business posted an operating loss of about $2.5 billion in the first quarter, larger than losses in the previous quarter and a year earlier.
The company’s PC chip sales were $7.5 billion, compared with an average estimate of $7.4 billion. Its data center and AI division had revenue of $3 billion, in line with Wall Street projections. Network chips generated nearly $1.4 billion in sales, beating an average estimate of $1.3 billion.
Gross margin – or the percentage of sales remaining after deducting the cost of production – was 45.1% during the quarter. This closely watched metric, which reflects the efficiency of Intel’s manufacturing operations, will…
