Intel (INTC) stock fell Friday after the beleaguered chipmaker beat low expectations for revenue in the second quarter but posted a surprise loss. It also raised concerns about its foundry business.
The Santa Clara, Calif.-based company late Thursday said it lost an adjusted 10 cents a share on sales of $12.86 billion in the June quarter. Analysts polled by FactSet had expected Intel to earn 1 cent a share on sales of $11.97 billion. In the same quarter last year, Intel earned 2 cents a share on sales of $12.83 billion.
Under generally accepted accounting principles (GAAP), Intel lost 67 cents a share in Q2, mostly related to restructuring charges.
↑ X NOW PLAYING Here’s Why Mastering Positions In Indexes And Individual Stocks Matters With its Q2 report, Intel barely returned to sales growth on a year-over-year basis after four straight quarters of declining sales.
For the current quarter, Intel expects to break even on an adjusted basis with sales of $13.1 billion, based on the midpoint of its guidance range. Wall Street was modeling Intel to earn 4 cents a share on sales of $12.66 billion in the third quarter. In the year-earlier quarter, Intel lost 46 cents a share on sales of $13.28 billion amid a corporate restructuring.
Intel said its underlying performance in the second quarter was solid. PC chip sales dropped 3% from the year-earlier period to $7.9 billion. Data center and AI processor sales increased 4% to $3.9 billion. Foundry sales increased 3% to $4.4 billion.
Intel Stock Sinks After Report
“Our operating performance demonstrates the initial progress we are making to improve our execution and drive greater efficiency,” Chief Executive Lip-Bu Tan said in a news release.
He added, “We are laser-focused on strengthening our core product portfolio and our AI roadmap to better serve customers. We are also taking the actions needed to build a more financially disciplined foundry. It’s going to take time, but we see clear opportunities to enhance our competitive position, improve our profitability and create long-term shareholder value.”
In morning trades on the stock market today, Intel stock fell more than 9% to 20.57.
Foundry Business Scrutinized
Meanwhile, Intel cast doubt on its foundry business moving to a next-generation process node, 14A. Tan said the company would need to secure an external customer to move forward with the 14A chip factory. Intel will focus on its current 18A process node for its next three generations of internal products, he said.
Tan’s statements potentially signal a move by Intel to fabless business model in three to four years, JPMorgan analyst Harlan Sur said in a client note. Sur rates Intel stock as underweight, or sell, with a price target of 21.
Intel dominated during the client-server era of computing, making chips for PCs and traditional servers. But it missed two major transitions — first the move to mobile computing with smartphones and more recently the shift to artificial intelligence in data centers.
Intel has lost market share to AMD (AMD) and Nvidia (NVDA) during its struggles.
MaxLinear Stock Jumps
Earnings reports were a mixed bag for chip stocks this week.
Mobileye Global (MBLY), NXP Semiconductors (NXPI), STMicroelectronics (STM) and Texas Instruments (TXN) fell after their June-quarter reports. But MaxLinear (MXL) shares surged after the company’s second-quarter report.
Carlsbad, Calif.-based MaxLinear returned to profitability on an adjusted basis after five consecutive quarters of losses. It earned 2 cents a share on better-than-expected sales of $108.8 million, up 18% year over year. MaxLinear makes radio frequency, analog, digital and mixed-signal integrated circuits.
On Thursday, MaxLinear stock rose 12.6% to close at 17.25.
“We have continued to drive strong customer and product traction in high-speed interconnects for the data center, multi-gigabit PON (passive optical network) access, Wi-Fi connectivity, Ethernet, and wireless infrastructure,” Chief Executive Kishore Seendripu said in a news release.
Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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