Decline in Data Center Revenue Pulls Intel’s Stock Down

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Decline in Data Center Revenue Pulls Intel’s Stock Down

 Decline in Data Center Revenue Pulls Intel’s Stock Down
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Summary

  • Intel’s data center revenue during the first three months of the year fell 20 percent year over year.
  • Revenue growth in the PC-centric business was offset by the decline in data center business.
  • The semiconductor company projects its GAAP revenue for full-year 2021 to be at US$77 billion.

Intel Corporation (NASDAQ:INTC) shares dipped as much as 7 percent on Friday’s trading after the company reported a 20 percent decline in its first-quarter data center revenue.

The investors seemed more concerned about Intel’s data center business as the shares slumped despite the semiconductor company lifting its 2021 forecast after exceeding its first-quarter estimates.

Intel’s net income during the first quarter plunged 41 percent year over year to US$3.4 billion while EPS came in at 82 cents, down 37 cents year over year.

On non-GAAP basis, net income fell 6 percent year over year to US$5.7 billion. EPS slipped to US$1.39 from US$1.41 in the year-ago period.

The chipmaker’s revenue during quarter declined by 1 percent as the double-digit drop in the data center revenue offset the gains in PC-centric business.

Source Refinitiv

Segment- wise performance

The California-based technology giant posted a 1 percent year-over-year decline in its first quarter GAAP revenue to US$19.7 billion. Non-GAAP revenue was flat at US$18.6 billion.

Intel’s revenue from data center unit slumped 20 percent year over year to US$5.6 billion. CFO George Davis attributed the decline to “cloud inventory digestion” during the quarter and a “challenging” comparison with the previous first-quarter figure. However, the CFO noted that the revenue “bottomed” in the first quarter and the company expects it to grow in the second quarter.

Meanwhile, Intel saw its revenue grow 8 percent in the cloud computing group during the quarter to US$10.6 billion. PC unit’s volume increased 38 percent as the company shipped a record volume of notebook CPUs.

Revenue from Intel’s internet of things group rose 4 percent during the quarter. The Mobileye unit, which provides driving assisted technology, set a record quarter with a 48 percent growth in its revenue.

Forecast

For the full year 2021, Intel now expects to report US$4 in EPS on revenue of approximately US$77 billion on a GAAP basis.

On non-GAAP basis, the revenue is projected at US$72.5 billion while EPS is expected to be US$4.60.

In 2020, Intel’s revenue grew 8 percent year over year to US$77.87 billion. GAAP EPS rose 5 percent to US$4.94 while non-GAAP EPS was up 9 percent to US$5.30.

For the second quarter of 2021, Intel anticipates its EPS to come in at US$1.05. The company forecasts GAAP revenue of US$18.9 billion and non-GAAP revenue of 17.8 billion.

On Friday, Intel’s stock ended trading at US$59.24, down 5.32 percent.

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