Intel shares sink as executives give three-year outlook

FILE PHOTO: A sign outside the Intel corporate campus in Hillsboro, Oregon, U.S., April 25, 2018. REUTERS/Caroline Humer/File Photo

SAN FRANCISCO (Reuters) – Intel Corp shares declined 2.5 percent after executives gave their three-year outlook at an investor day on the company’s Santa Clara, California campus.

Chief Executive Bob Swan said on Wednesday the company sees both revenue and earnings per share growing in the “single digit” percentage range over the next three years, with flat PC chip sales offset by “double digit” percentage revenue growth in data center chips.

Swan also said operating margins would remain relatively steady at 32 percent, but that gross margins would decline as the company ramps up its 10-nanometer chipmaking technology, which makes chips faster by making their features smaller.

Intel was once the dominant maker of processors for personal computers and has sought to expand its data center chip business as PC sales stagnated. The company’s shares dropped to $49.24 after the announcements.

Intel has struggled with delays in its 10nm chipmaking technology, losing its lead in making the smallest chip features to rival Taiwan Semiconductor Manufacturing Co Ltd (TSMC). Intel plans to launch 10nm chips for high-end personal computers later this year, and for servers early next year.

Swan said that Intel plans to deliver even smaller 7nm chips by 2021, an aggressive timeline after taking years to develop its 10-nanometer process.

“Gross margins will come down as we transition to 10nm and develop 7nm pretty quickly thereafter,” Swan said during the conference.

Reporting by Stephen Nellis in San Francisco and Akanksha Rana in Bengaluru; Editing by Shinjini Ganguli and Phil Berlowitz

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