Intel stock crashes 22% as Q2 misses estimates on margin issues
Investing.com — Intel stock fell significantly after the chipmaker on Thursday suspended its dividend and said it expected a loss in the third quarter after reporting Q2 results that fell short of estimates amid margin pressures.
Intel Corporation (NASDAQ:) crashed 22% in Friday’s premarket trading.
The company said it was suspending its dividend starting in Q4.
Intel Q2 adjusted earnings of $0.02 on revenue of $12.83B, missing Wall Street estimates of $0.10 and $12.93B, respectively.
The miss on the top and bottom lines comes as margins were hurt by the “accelerated ramp of our AI PC product, higher than typical charges related to non-core businesses and the impact from unused capacity,” the company said.
Gross margin fell 0.4% to 35.4%.
Looking ahead to Q3, the company guided for an adjusted loss of $0.03 on revenue in a range of $12.5B to $13.5B, confounding analyst estimates for adjusted EPS of $0.31 on revenue of $14.39B.
Intel forecast margin in Q3 falling to 34.5% even as it detailed cost-cutting plans including a more than 15% headcount reduction, to resize and refocus.
“Falling share, margin issues, and capex/opex cuts smell more like a spiral as time running out on a solution,” Jefferies analysts commented in a post-earnings note.
“This is yet another major reset of the story with Client and Servers both well below seasonal and gross margins significantly lower,” they added, maintaining a Hold rating on the stock and trimming the price target from $34 to $28.
Yasin Ebrahim contributed to this report.
