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The CFO also shed light on the declining revenue from Intel’s data center unit, its second-largest business as per S&P Global Market Intelligence data. Despite expectations of recovery, this unit has been underperforming for the past two years.
In response to these disclosures, Investment bank Morgan Stanley stated on Wednesday morning that they were not entirely unexpected. However, Citigroup (NYSE:C) analyst Christopher Danely expressed concern in a report released early Wednesday. According to Danely, Intel’s new guidance falls short of Wall Street analysts’ consensus forecast, hinting at a possible earnings shortfall for the company.
Danely drew attention to Zinser’s mention of only “modest” improvements in profit margins for Intel this quarter. The analyst voiced doubts about Intel’s attempts to establish a chip foundry business – manufacturing computer chips designed by other firms – and predicted such an endeavor would not generate significant profits for Intel.
Currently, neither Morgan Stanley nor Citigroup recommends buying Intel stock; both rate it as neutral. Furthermore, Danely from Citigroup advises Intel to abandon its chip foundry venture.
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