Intel shares drop 14% on Israel factory blast, PC weakness
INTC•Intel shares fell 14% after an explosion at its Israel factory was expected to cut revenue by about $600 million over two quarters. The company forecast fourth-quarter revenue of $15 billion to $16 billion, below the $17.07 billion analyst estimate, and said PC weakness would continue through the first half of next year.
1. Factory blast hits revenue
Intel said an explosion at its Kiryat Gat factory would reduce fourth-quarter revenue by about $300 million and gross margins by roughly 200 basis points, with a similar revenue impact expected in the first quarter. The blast killed two people and seriously injured one. Intel plans to ramp production at the facility by the end of the week after a two-week shutdown, while it assesses which wafers can be salvaged.
2. PC sales weaken
Intel expects PC revenue to decline in the mid-twenty percentage range in the fourth quarter and said the slowdown would continue through the first half of next year. Sales in its PC chip business fell 5% to $8.10 billion, below estimates of $8.98 billion.
3. Forecast and results
Intel forecast fourth-quarter revenue of $15 billion to $16 billion and adjusted profit of 25 cents per share, below analyst estimates of $17.07 billion and 43 cents. Third-quarter revenue rose 21% to $16.51 billion, while adjusted profit was 52 cents per share.
