With the third-quarter earnings cycle well underway, Intel has joined the likes of Netflix by failing to meet financial metrics and consequently suffering a decrease in share prices.
After the company reported its Q3 data, Intel shares decreased by 10% during after-hours trading. This change was unexpected in the eyes of investors, particularly since the company succeeded in meeting its earnings per share estimate of $1.11 per share and exceeded its revenue target, generating $18.3 billion instead of $18.26 billion. So where exactly did Intel go wrong?
It was found that Intel’s data-focused business, the smaller of two divisions (the other being PC chips), was hit by significant financial losses. Its Data Center Group (DCG) business shrank by 47% compared to this time last year, ultimately delivering revenue of $5.9 billion. This was $0.32 billion lower than its expected $6.22 billion revenue, a stunning blow to the company.
With few other areas of weakness to point out, Intel blamed its decrease in share prices on the weak economic conditions caused by the COVID-19 pandemic. One particular concern was the impact that the virus had on Intel’s business and memory operation, which declined 33% and 11% respectively on a year-over-year basis.
