An investor meeting that Intel held last night, where the company announced its plans to release and implementation does not seem to have impressed the stock market. Immediately after the event, the company's shares fell by about 9%. This was partly a reaction to the words of Intel CEO Bob Swan that profit growth will remain moderate over the next three years, and that Intel, a former leader in the semiconductor market, will now probably have to catch up with large competitors in technology. plan.
The company has already lowered its earnings and revenue guidance for this year. Now very gloomy words were heard from the lips of the first person of the company: βI just want to note what happened. We let you down. We let ourselves down." Robert Swan recalled that over the past three years, Intel has systematically increased revenue and profit above forecast values. However, this, according to him, does not at all justify the miscalculations of management in its inability to discern signs of a slowdown in the growth of the PC market, which is key to the company. Therefore, now the company will have to seriously focus on changing itself and changing priorities.
However, the event was devoted not so much to stating the current situation as to plans for the future. Investors got a clear idea of ββthe intended paradigm shift and that Intel, which previously dominated the personal computer chip market convincingly with over 90 percent market share, is losing its halo of exclusivity as it expands its range of interests.
As PC sales are stagnant, the company will increase its business in data center processors, memory, networking solutions and IoT chips. However, this will lead to the fact that in a few years Intel will become a smaller player in a larger market. According to Bob Swan, Intel's share of its new target market by 2023 will be only 28%, and sales will be in the range of $85 billion in a market estimated at $300 billion.
The share of the company's revenue from traditional areas related to the PC will decrease from the current 50% to 30%.
As stated from the podium, Intel also needs to change its culture. Making good products and waiting for customers to come for them is no longer enough, says Robert Swan. According to him, now the company will have to think of itself only as one of the players and try to orient its products to the needs of customers.
All of this restructuring will also result in earnings and earnings per share growing over the next three years by single-digit percentages. And this is not so bad, since the PC market will not grow, and in the near future Intel will have to bear additional expenses associated with the introduction of 10nm and 7nm technologies, as well as in connection with its abandonment of the 5G modem business. . That is, the entire increase in profits will be provided only by the double-digit percentage growth of the company in the segment of data center solutions.
However, it was taken by analysts to mean that Intel's earnings in the coming years will grow at a slower pace than other major chipmakers. For example, such a forecast was issued by Kinngai Chan of Summit Insights Group, emphasizing that Intel predicted only symmetrical growth in profits and revenues, while other companies in the industry are growing profits faster than revenues.
Source: 3dnews.ru