Intel’s Sales Shortfall Sparks Potential Largest Share Drop in 24 Years

2 min read | August 02, 2024 12:00 AM PDT | By Team Kalkine Media

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Intel’s Sales Shortfall Sparks Potential Largest Share Drop in 24 Years — Image source: shutterstock.com

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Key Highlights:

Intel projected sales between USD 12.5 billion and USD 13.5 billion, falling short of analyst expectations, and anticipates a loss of 3 cents per share instead of a profit.
The company plans to cut over 15% of its workforce and suspend dividend payments starting in Q4, marking significant shifts in its financial strategy.
Intel shares dropped more than 22% in premarket trading, potentially setting up for the largest intraday decline since September 2000, reflecting investor concerns about its competitive position in the AI market.

Intel Corp. is poised for its largest share decline in 24 years following a bleak growth forecast and plans to cut 15,000 jobs. The company's recent announcement highlights its struggles to adapt to the rapidly evolving artificial intelligence (AI) landscape.

For the current quarter, Intel projects sales between USD 12.5 billion and USD 13.5 billion, falling short of analysts' expectations of USD 14.38 billion. Additionally, Intel anticipates a loss of 3 cents per share, contrasting with the anticipated profit of 30 cents. The company’s outlook reveals significant challenges in meeting market expectations and highlights its difficulties in adapting to new technologies.

In response to these financial pressures, Intel plans to reduce its workforce by over 15% from its current headcount of around 110,000 employees. This move is part of a broader strategy to cut costs, which also includes suspending dividend payments starting in the fourth quarter. Intel has paid a dividend since 1992, making this a notable shift in its financial policy.

Intel's shares plummeted more than 22% in premarket trading, marking a potential record decline since September 2000. This drop reflects broader concerns about Intel’s ability to compete effectively in the AI sector, where rivals like Nvidia and Advanced Micro Devices (AMD) are capturing significant market share. Intel’s stock has decreased over 42% this year and remains one of the poorest performers on the Philadelphia Stock Exchange Semiconductor Index.

Despite a robust spending plan aimed at restoring industry prominence, Intel is struggling to advance its technology quickly enough to retain customers. Chief Executive Officer Pat Gelsinger acknowledged the challenging path ahead, emphasizing the need for "some of the most consequential changes" in the company’s history.

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