-
Intel’s stock fell as much as 10% on Friday on a weak outlook that factored in the impact of tariffs.
-
The company expects tariffs to add costs amid growing odds of a recession.
-
Its estimate-beating results were boosted by consumers looking to get ahead of the trade war, it said.
The move: Intel shares fell as much as 10% Friday, hitting an intraday low of $19.34 per share. The slump shortly after the open erases the stock’s year-to-date gain.
Why: Investors dumped shares on Friday despite better-than-expected first-quarter earnings.
While the firm notched adjusted earnings-per-share of $0.13, beating consensus expectations, it failed to break a streak of quarterly losses, logging an $821 million income decline.
Guidance was more discouraging. For the second quarter, Intel expects $11.2 billion to $12.4 billion in revenue, short of projections of $12.8 billion.
“The very fluid trade policies in the US and beyond, as well as regulatory risks, have increased the chance of an economic slowdown, with the probability of a recession growing,” David Zinsner, Intel’s chief financial officer, said in the earnings call.
What it means: In other words, Intel is sharing in the macroeconomic jitters that many companies have expressed in the early days of Trump’s trade war.
“While we have offsets including a global, highly diversified manufacturing footprint to help mitigate tariffs, we will certainly see costs increase and we feel it prudent to anticipate a TAM contraction,” he added.
The firm’s first-quarter outperformance could be justified by a consumer rush to buy Intel’s products ahead of tariff disruptions, he added.
All in all, this uncertainty is a bleak outlook for a company already in a bind. On Thursday, the chipmaker’s new CEO, Lip-Bu Tan, issued a memo to redirect the company back from the brink: plans include layoffs and a stricter return-to-office mandate.
Over recent years, the semiconductor designer has fallen behind on the artificial intelligence race, and has had to navigate an era of layoffs and buyouts.
Read the original article on Business Insider
