Intel Corp is likely to report its worst quarterly loss on record as it has been seeing shriveling sales in its two key businesses — personal computers and data centers — since last year.
According to analysts polled by FactSet, Intel, which is scheduled to report earnings after the close of markets on Thursday, is likely to report a loss of over $3 billion, or $0.76 a share.
That would be by far the largest quarterly loss on record in the storied Silicon Valley giant’s long history. In records reaching all the way back to 1993, the chip maker has never reported a GAAP loss of more than $687 million, according to Dow Jones Market Data.
Intel had outlined its plans last year to increase investments in an effort to regain its edge in advanced manufacturing technology, while also building out a foundry business that makes chips designed by other firms. This is likely to be impeded by the fact that PC sales are seeing its worst slump in years. Intel’s personal computing unit, its largest source of revenue, is expected to report a 48% drop in personal computing sales, according to analysts.
In the meantime, in line with what we saw last year, data center customers have been systematically cutting back their orders, leaving the chip maker with excess inventory.
In January, Intel executives forecasted an adjusted loss for the first quarter, when analysts on average were expecting an adjusted profit of $0.25 a share. It’s a perfect storm for Intel as worsening macro economic conditions, inventory buildups in the PC space and a struggling data-center business allow rival Advanced Micro Devices Inc to chip away at its market share.
Still, Susquehanna Financial Group analyst Christopher Rolland said that the major resets for “Intel are likely behind us.”
Rolland, who has a 'Neutral' rating on Intel stock, noted that he sees the 1Q as “likely marking the bottom for PC client,” while for data center, he expects results in line with Intel’s “dour guidance.”
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive