Intel shares hammered as company lowers outlook for 2019

Intel's shares closed 7.1 percent lower at $53.52 in yesterday's after-hours trading as the chip giant announce a disappointing outlook. The firm announced first quarter revenue of $16.1 billion, flat year-over-year, and GAAP net income of $4.0 billion, down 11 percent year-over-year.

On an adjusted basis, net income was down 3 percent year-over-year to $4.0 billion, while earnings per share rose 2 percent to $0.89 per share. Both the revenue and non-GAAP EPS figures were slightly better than analyst's expectations, but Intel surprised the market with a pessimistic outlook.

Intel expects second-quarter revenue of around $15.6 billion, which is a lot lower than the $16.88 billion consensus. Furthermore, Intel slashed its full-year revenue outlook to $69.0 billion from $71.5 billion.

"Results for the first quarter were slightly higher than our January expectations. We shipped a strong mix of high-performance products and continued spending discipline while ramping 10nm and managing a challenging NAND pricing environment. Looking ahead, we're taking a more cautious view of the year, although we expect market conditions to improve in the second half," said Bob Swan, Intel CEO. "Our team is focused on expanding our market opportunity, accelerating our innovation and improving execution while evolving our culture. We aim to capitalize on key technology inflections that set us up to play a larger role in our customers’ success, while improving returns for our owners."

In the first quarter, Intel achieved 4 percent growth in the PC-centric business while data-centric revenue declined 5 percent.

The PC-centric business (CCG) was up 4 percent in the first quarter due to a strong mix of Intel's higher performance products and strength in gaming, large commercial and modem. Intel's first high-volume 10nm processor, code-named Ice Lake, remains on track to be in volume systems on retail shelves for the 2019 holiday selling season.

Collectively, Intel's data-centric businesses declined 5 percent YoY in the first quarter. In the Data Center Group (DCG), the cloud segment grew 5 percent while the communications service provider segment declined 4 percent and enterprise and government revenue declined 21 percent. First-quarter Internet of Things Group (IOTG) revenue grew 8 percent YoY (19 percent excluding Wind River1), and Mobileye achieved record first-quarter revenue of $209 million, up 38 percent YoY as customer momentum continued. Intel's memory business (NSG) was down 12 percent YoY in a challenging pricing environment. Intel's Programmable Solutions Group (PSG) revenue was down 2 percent YoY in the first quarter.

The first quarter marked the introduction of a broad, new portfolio of data-centric products from Intel featuring the 2nd-Generation Intel® Xeon® Scalable® processor family with integrated Intel® Deep Learning Boost (Intel® DL Boost) for AI deep learning inferencing acceleration and support for Intel® Optane™ DC persistent memory, the revolutionary technology that brings affordable, high-capacity persistent memory to Intel’s data-centric computing portfolio. Intel also introduced more than 50 workload-optimized Intel® Xeon® processors, a 56-core, 12 memory channel Intel® Xeon® Platinum 9200 processor, and the new Intel® Agilex™ line of 10nm-based FPGAs.