Intel shares drop 21% on Israel factory blast, PC weakness
INTC•Intel shares fell 21% after the company said an explosion at its Israel factory would cut revenue by about $600 million over two quarters and forecast fourth-quarter revenue of $15 billion to $16 billion, below analysts’ $17.07 billion estimate. Intel said PC weakness could continue through the first half of next year.
1. Factory blast weighs on outlook
Intel shares fell 21% after the company said an explosion at its Kiryat Gat, Israel, factory would reduce revenue by about $600 million over two quarters. The blast killed two people and seriously injured one, according to local media reports. Intel plans to ramp up production at the facility by the end of the week following a two-week shutdown, CFO David Zinsner said.
2. Revenue and PC forecasts
Intel expects fourth-quarter revenue of $15 billion to $16 billion, compared with analysts’ average estimate of $17.07 billion, and adjusted profit of 25 cents per share, below the 43-cent estimate. Zinsner said the factory disruption would reduce fourth-quarter revenue by about $300 million, with a similar impact expected in the first quarter. He expects the PC slowdown to continue through the first half of next year; Intel’s PC chip sales fell 5% to $8.10 billion in the third quarter.
3. Third-quarter results
Third-quarter revenue rose 21% to $16.51 billion, roughly matching estimates, while adjusted profit of 52 cents per share beat estimates of 40 cents. Zinsner said Intel does not expect positive cash flow this year as it invests in expanding manufacturing capacity.
