Intel drops 6% in extended trading despite an upbeat earnings report

Intel Corp. (NASDAQ: INTC) released its financial results for the first quarter on Thursday that came in significantly stronger than expected. The technology company, however, warned that its profit is likely to take a hit in the second quarter.

Intel’s dovish statement regarding Q2 wasn’t well-received in the stock market as it dropped roughly 6% in extended trading on Thursday.

Intel Records Its Quarterly Net Income At £4.59 Billion

The American multinational corporation recorded its quarterly net income at £4.59 billion that translates to £1.06 of earnings per share and is sharply higher than £3.22 billion (71 pence of earnings per share) that it recorded in the comparable quarter last year.

On an adjusted basis, Intel posted its earnings in the first quarter at an even higher £1.18 per share versus the year-ago figure of 72 pence per share.

The U.S chipmaker reported £13 billion in revenue in the first quarter last year. In the recent quarter, the figure improved by a massive 23% to print at £16 billion in quarterly revenue. According to FactSet, analysts had forecast the company to note £15.14 billion in revenue in Q1 and their estimate for earnings per share was capped at £1.04 per share.

Intel issued £6.5 billion in debt earlier this year and suspended its share buyback programme to preserve cash amidst the ongoing Coronavirus pandemic. On Thursday, the company also joined the huge list of businesses that have withdrawn annual financial guidance for 2020.

COVID-19 Can Help Boost Intel’s Financial Performance

As per analysts, COVID-19 can be expected to benefit Intel in the near term as the virus pushes companies from across the globe to resort to work from home arrangements. Relying heavily on laptops and cloud-computing during this time, increased sales for Intel’s server chips and personal computers at large will support its financial performance.

In the second quarter, the tech company said that it expects to make £15 billion in sales and earn 89 pence per share. Experts, on the other hand, are anticipating a lower £14.43 billion in sales for Intel in Q2 but a higher profit of 97 pence per share.

Intel’s quarterly revenue increased 43% in the data-centre group and 14% in client computing segment, both of which topped analysts’ estimates.

The U.S technology company is currently a little under 10% down year to date in the stock market. It is valued at £205 billion and has a price to earnings ratio of 12.55.