October 14th, 2015: Intel Corporation cuts down on its revenue growth forecast as the worldâ€™s biggest chipmaker for data centers as businesses reduce investment due to weak macroeconomic growth. The shares of the company reversed course to 3.8% after the forecast on Tuesday.
Because of the falling demand for chips, Intelâ€™s biggest source of revenue, they had been counting on data centers for their revenue generation. The company revealed that growth in â€œlow double digitsâ€ in data centers business this year was well expected as compared to the growth in the previous year which was 15%.
The company had agreed to takeover Altera Corp. in June with an investment of $16.7 billion to increase its line-up for higher-margin chips used in data centers. The companyâ€™s second biggest business had grown 19.2% in the first quarter, 9.7% in second and 12% in the last quarter.
What took away shine from the companyâ€™s better-than-expected profits and high revenue was the data centre forecast. Not only revenue, the company also had to cut down on its capital expenditure for the third time to $7.3 billion plus or $500 million minus. Earlier, the expected capital expenditure was $7.7 billion plus to $500 million minus. The worldwide shipments for personal computers fell to 7.7% in the third quarter. All-in-all, Intelâ€™s net income fell to 64 cents per share a year.
Net revenue decline at Intel was $14.47 billion from $14.55 billion, beating analysisâ€™s estimate of $14.22 billion.
On Tuesday, Intelâ€™s stock had fallen 11.7% this year, more than 9.4% fall in broader semiconductor index.