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Intel’s Growth Weakness in Data Center a Surprise: Wall Street Analysts
| 01/25/2019
Intel experienced growth weakness in data centers during the last quarter and predicted slow growth in the sector. This has come as a surprise to Wall Street analysts who now believe that data centers which have experienced massive growth over the years is beginning to dry up.
Intel data could affect rivals
Intel released its revenue and profit projection for the first quarter of 2019, and it fell below analysts’ average estimates. This subsequently saw Intel shares drop by 5.9 percent at the pre-market trading earlier today.
Intel cited issues such as reduced spending at large cloud-computing customers, softness in China, and other geopolitical concerns as reasons behind the weak forecast. The drop in revenue for Intel in that area comes as big tech companies offering cloud computing like Amazon.com Inc., Alphabet Inc.’s Google and Microsoft Corp. all reduce their orders.
Analysts had earlier predicted sales of $19 billion in the last quarter, with Intel recording $18.7 billion instead. The net income meanwhile stood at $5.2 billion, or $1.12 a share, which is lower than the $1.17 predicted by analysts.
Intel now predicts that revenue in this quarter will be around $16 billion with profit set at 81 cents per share. This is below the $17.3 billion and earnings of 96 cents per share estimated by analysts.
This year, the company expects revenue of around $71.5 billion, which is below the $73 billion projected by analysts. The project would be the slowest annual growth recorded by the company since 2015.
Chipmakers such as Texas Instruments Inc., Xilinx Inc., and Lam Research Corp. have all recorded better-than-expected results, but analysts expected a drop in the market this quarter following recent earnings projection by Intel.