Director-General Patrick Gelsinger had to admit that Intel's second quarter reporting was "", so it's no surprise that after the US tender opened, the value of the processor giant's stock was going down by more than 10%.
Remember, Intel's combined revenue declined by 17% in the second quarter, the server segment declined by 16% and the client's by all 25% compared to the same period last year. The rate of return was reduced to 36.5%, and in the current quarter Intel's only expected to increase it to 46.5%, and in the fourth quarter only to reach 51% more comfortable. Finally, the net loss of $454 million, the intention to reduce capital spending of $4 billion, and the modest expectation of revenue in the current quarter, only exacerbated investors' pessimisticism. They were not even convinced by Intel's attempt to gradually increase the dividend payments from $1.5 billion per quarter.
At the time of writing, Intel's shares were being traded at $36.11 a grand, and Baird's specialists reduced the target value from $60 to $40, explaining that Intel's inability to quickly offset the weak demand in the PC market, on which its revenue is still heavily dependent. The delay in the delivery of the Sappire Rapids server processors, according to the forecasters, will enable AMD to consolidate its position in the server segment in the second half of this year.
Susquehanna's analysts even used a less typical argument to support their argument about the long-term nature of the difficulties that Intel faced in the server and consumer segment. They said that the Arm architecture processors would successfully close Intel's products in both market sectors. In the PC segment, AMD would continue to take down market positions from Intel, albeit at a slower rate than in previous years. The 5 n of the EPYC processors of the Genoa family would only strengthen the AMD position in the server segment, taking into account the delay in starting mass deliveries of Sapphire Rapids until next year.
According to the experts, Intel may also face over-enrichment of the PC market after two years of strong growth, delay in the annotation of the Granite Rapids and Meteor Lake processors, and a decline in business profitability due to the need to invest heavily in new lithographic standards. As the representative of Susquehanna Christopher Rohlland explains, Intel may have been able to cover decades of losses from failed projects, failed acquisitions and erroneous policy decisions at the expense of its lithography leadership. Since it seems unlikely to be returned, experts believe that the company will have to change its strategic development vector, otherwise it will face constant problems of growth, low profitability and lack of free money.