Intel CEO Bob Swan was introduced as “interim CEO” (as he was for six months prior to his January appointment) on an earnings call with analysts late Thursday, joking uneasily “I thought on our outlook I was getting demoted already”.
Many a true word is spoken in jest. While the newly appointed chief executive no doubt has little to worry about a mere four months into his tenure, Intel’s disappointing outlook did indeed cause a demotion of sorts on the stock market: shares tumbled nearly 10 percent after the chip giant’s Data Centre Group saw revenues fall 19 percent on the previous quarter to $4.9 billion amid demand constraints.
“Our conversations with customers and partners across our PC and data-centric businesses over the past couple months have made several trends clear,” Swan said on the conference call, as he cut the company’s outlook.
He added: “The decline in memory pricing has intensified, the data-center inventory and capacity digestion that we described in January is more pronounced than we expected, and China headwinds have increased.”
Apologising to customers for ongoing supply constraints, he said: “Specific areas where we need to improve execution include meeting customer demand and delivering on our 10-nanometer lineup of products, and we are making progress.”
“Our supply constraints have had a disruptive impact on our customers and ecosystem. We’ve committed never again to be a constraint on our customers’ growth.”
Intel Earnings: Ongoing Shift Away from “PC-Centric” Company
Net income fell 11 percent to $4 billion in the quarter year-on-year, with revenue flat at $16.1 billion.
“Looking ahead, we’re taking a more cautious view of the year, although we expect market conditions to improve in the second half,” said Swan.
“Our team is focused on expanding our market opportunity, accelerating our innovation and improving execution while evolving our culture. We aim to capitalise on key technology inflections that set us up to play a larger role in our customers’ success, while improving returns for our owners.”
Further expanding on this month’s abrupt decision to back out of the 5G modem market for smartphones following Apple and Qualcomm’s settlement, he told analysts on the earnings call: “By acting now, we focus our 5G efforts on the transformation of the wireless network and edge infrastructure, where we have a clear technology advantage, market share to win and a strategic role to play with customers.”
“We expect to qualify our first volume 10-nanometer product, Icelake, this quarter and are increasing our 10-nanometer volume goals for the year”, he added.