Chip Maker Intel Reports Q1 Financial Results that Miss Expectations

Shares of Intel were falling in after-hours trading on Thursday after the company reported its first quarter financial results that missed expectations in its data center chip unit, and a second quarter profit forecast that also fell below what analysts were calling for.

Intel said adjusted sales and earnings for the first quarter ended March 27 were $18.6 billion and $1.39 per share, higher than analyst estimates of $17.89 billion and $1.15 per share, according to Refinitiv data.

The company’s data center chip business had $5.6 billion in first-quarter sales, below FactSet estimates of $5.89 billion.

The stock was down a little over 3% in extended trading as Wall Street digested the news.

Intel, which designs and manufactures its own chips, had said its PC chip business had sales of $10.6 billion however in the first quarter, ahead of analyst expectations of $10.17 billion, according to data from FactSet.

CEO Pat Gelsinger told Reuters following the release of Intel’s earnings that the company exceeded PC chip expectations in part because it was able to finish in its own factories so-called organic substrates.

The Chief Executive said the changes helped Intel mitigate a global shortage of the substrate materials and “generate millions of units of more supply.”

“We were able to satisfy our customer commitments, as we expect that we’ll be able to do through the rest of the year,” Gelsinger explained. “If we are able to gain more leverage in our supply chain, which we have lots of tools to go do, I expect we’ll both have beat our guidance for the year and gain more market share for the year.”

Looking ahead, Intel said it expects 2021 adjusted revenue and profits of $72.5 billion and $4.60 per share. This was above analyst estimates of $72.32 billion and $4.58 per share, according to Refinitiv data.

The company is expecting second-quarter adjusted revenue and profits of $17.8 billion and $1.05 per share, with sales above analyst estimates of $17.59 billion but profits below estimates $1.09 per share, according to Refinitiv data.

According to CFO George Davis, who spoke to Reuters, the lower profits were because the company was investing in ramping up its new 10-nanometer and 7-nanonmeter manufacturing technologies.

Intel’s non-adjusted results include a $2.18 billion judgment won by VLSI Technology LLC in a patent trial in March. Gelsinger said the company is appealing that verdict.

“We need fundamental patent reform. So not only are we going to be aggressive in our appeal, we’re also going to be even more aggressive and driving a patent reform. This is a topic that I’ve brought up in my multiple conversations with White House officials this year,” Gelsinger stated.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.