Intel's grim forecasts erase $8b from its market value

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Intel logo at China International Fair for Trade in Services, Beijing, China, September 3 2022. /CFP

Intel Corp. saw about $8 billion wiped off its market value on Friday after the U.S. chipmaker stumped Wall Street with dismal earnings projections, fanning fears around a slump in the personal-computer market.

The company predicted a surprise loss for the first quarter and its revenue forecast was $3 billion below estimates, as it also struggled with slowing growth in the data center business.

Intel dropped 6.4 percent for the day as it contends with weakening demand. Rival Advanced Micro Devices and Nvidia ended the session up 0.3 percent and 2.8 percent, respectively.

"No words can portray or explain the historic collapse of Intel," said Rosenblatt Securities' Hans Mosesmann, who was among the 21 analysts to cut their price targets on the stock.

The poor outlook underscored the challenges facing Chief Executive Pat Gelsinger as he tries to reestablish Intel's dominance of the sector, by expanding contract manufacturing and building new factories in the United States and Europe.

Intel, which plans to cut $3 billion in costs this year, generated $7.7 billion in cash from operations in the fourth quarter and paid dividends of $1.5 billion.

With capital expenditure estimated to be around $20 billion in 2023, analysts said the company should consider cutting its dividend.

(With input from Reuters, AFP)

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