Depressing financial statistics reduced Intels capitalization by 8 billion

Depressing financial statistics reduced Intel’s capitalization by $8 billion

Ahead of the main US trading session, the quarterly report released by Intel slashed the market value of the company’s shares by nearly 10%, but ended Friday down 6.41%. In any case, Intel’s capitalization fell by $8 billion overnight, and management’s own guidance for the first quarter came in worse than the most pessimistic market expectations.

    Image source: Intel

Image source: Intel

Recall that Intel expects earnings of $10.5 billion to $11.5 billion in the current quarter, down nearly 40% year over year, and falling just under $3 billion short of analysts’ expectations , which the Bernstein experts were forced to do recognizethat the extent of the deterioration in the indicators turned out to be unexpectedly serious. The company is falling in sales and profits, while the surplus of inventory products remains at levels above all forecasts.

Cowen experts believe that it will be difficult for Intel not only this year, but also next year to count on some kind of revenge against AMD in the server segment. Even if the overall market sees demand picking up again in the second half of the year, by that time Intel will arrive in such a depleted state that some future investment plans will likely have to be abandoned, Bernstein officials expect.

In fact, Intel is targeting $20 billion in investment this year, but the market environment will not be conducive to efficient capital raising from its own funds. The company’s management is trying to woo the public with the idea that third-party funds such as grants and partner funds make it possible to maintain the pace of industrial expansion, but skepticism among investors is increasing.

The situation is even more delicate when it comes to paying dividends to investors. Last year, $6 billion was allocated for that need, and at the latest quarterly conference, Intel’s management said it would try to keep dividend levels competitive. In the current situation, it would be wiser to refuse to pay dividends and use the saved funds to finance projects or develop new technologies, but Intel is not yet ready to adapt to new unfavorable conditions.

About the author

Dylan Harris

Dylan Harris is fascinated by tests and reviews of computer hardware.

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