The third-quarter earnings for Intel showed a steady slope in share prices as it closed on Friday. There were new weaknesses identified in the business of data center, which might be one of the causes for this fall in share prices.
The company also affirmed that there would be a delay in releasing the latest generation chips for this year, which is also linked to the fall in the stock process.
The company’s Q3 data reported that there will be an above 10% drop in the share prices in after-hours trading. It was expected that the company would adjust $1.11 in the per-share profit from 22% of last year’s numbers. It was also expected that the revenues reported should be around $18.26 billion for Q3 data, which was a drop of 5% from the last year’s earnings.
Intel, however, did meet the revenue expectations and made $18.3 billion, more than the expected $18.26 billion. It also matched the per-share earnings which were estimated at $1.11 on a slightly adjusted basis.
What was the reason behind this rapid fall in the stock price though?
It was revealed that the drop might be due to the weakness in the company’s business unit focused on data handling. The Data Center Group (DCG) has reported overall mixed results with a spike in the revenues of 15% for the cloud. However, it was also reported that the Enterprise and government business went down about 47% than that of last year’s.
The company was expecting revenue of $6.22 billion from the DCG business unit while it delivered about $5.9 billion, which was a sharp fall from the number expected. Thus it resulted in weakness in the business unit.
Intel had blamed the COVID-19 pandemic outbreak for the downfall of the company’s business. They also blamed pandemic for their decline in the Internet of things business and memory operation, which was seen to be a sharp fall of 33% and an overall 11% fall from last year’s numbers.
Since the COVID-19 is resurgent in the North American continent and all over Europe, the investors are perplexed about the future of the company. They are worried that macroeconomic shortcomings can harm Intel’s stock price once again for the fourth-quarter earnings.
If that came to be and Intel suffers from such a sharp decline in stock prices for two quarters in a row, the investors are concerned that the company’s growth could remain negative for longer than expected. The belief led them to sell some of Intel’s equity before the situation snowballed into a disastrous black hole.
Guidance, as found out, had no part to play in the drop of stock prices. The Guidance revenue has shown a much smaller fall in what was expected of them this year. The expected revenue was $17.4 billion and per share selling, $1.10. The Q3 2020 showed $1.06 per share earnings and a total of $17.34 billion in revenues.
It is not intelligent to over-describe the prices drop for Intel just yet; however, if COVID-19 truly is to blame, this fall can become an issue. There are reports of COVID-19 being on the rise again, and there could be a chance of that hurting the market once again.
I’m Ava Paul, an experienced news website author with a special focus on the entertainment section. Over the past five years, I have worked in various positions of media and communication at World Stock Market. My experience has given me extensive knowledge in writing, editing, researching and reporting on stories related to the entertainment industry.
