Market Overview

Intel Shares Plunge On Falling Margins, Increased Competition In Q3

Intel Shares Plunge On Falling Margins, Increased Competition In Q3

Intel Corporation (NASDAQ: INTC) reported a weak third-quarter, which barely met revenue and earnings per share estimates.

Data-centric revenue fell 10% year-over-year, with DCG revenue falling 7% YoY to $5.9 billion.

In the DCG group, cloud revenue grew 15% YoY due to higher demand from work-at-home, but Enterprise & Government market due to a challenging macro environment.

PC-centric revenue grew 1% YoY to $9.8 billion due to higher demand for PCs. The average selling price (ASP) was down 6% due to an increase in entry-level education PCs.

Gross margins fell a substantial 560 basis point YoY to 54.8%; Operating income fell 22% YoY to $5.4 billion.

The company's 10nm Arizona facility is fully operational and expects to ship 30% higher production volumes.

Outlook: Intel expects Q4 revenue of $17.4 billion, a non-GAAP operating margin of 26.5%, and an EPS of $1.10.

For the full-year, Intel sees an operating margin of 31.5% and operating cash flow in the range of $32.2 billion to $33 billion.

Highlights from the conference call: "We're seeing increased competition in the second half of the year, but not different levels of competition than we thought. We feel good about where we are on the year. So I would say it's really a mix story and a very different mix than we thought going in," said CFO George Davis.

"10-nanometer accelerated because -- as it's displacing 14-nanometer, there's a margin impact from that. So we think, even as we see cost initiatives that are improving the cost structure of 10-nanometer, the teams are working on the yield performance of 10-nanometer all that should show up as positive," said George Davis.

Rosenblatt maintains a Sell rating on the Intel with a price target of $40.

See Intel's earnings presentation here.

Price Action: INTC shares are down 9.5% to $48.76 in the pre-market session at last check Friday.

Image Courtesy: Wikimedia

Latest Ratings for INTC

Nov 2020Northland Capital MarketsUpgradesUnderperformMarket Perform
Oct 2020JP MorganMaintainsOverweight
Oct 2020Deutsche BankMaintainsHold

View More Analyst Ratings for INTC
View the Latest Analyst Ratings


Related Articles (INTC)

View Comments and Join the Discussion!

Posted-In: why it's movingAnalyst Color Earnings News Guidance Reiteration Top Stories Analyst Ratings Best of Benzinga

Latest Ratings

PMTB of A SecuritiesMaintains18.5
IVRB of A SecuritiesMaintains3.0
EFCB of A SecuritiesMaintains15.5
NYMTB of A SecuritiesMaintains3.5
NLYB of A SecuritiesMaintains8.5
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at