(Bloomberg) — Intel Corp., the world’s largest chipmaker, gave a lackluster forecast for the current period, fueling concerns that the cost of Chief Executive Officer Pat Gelsinger’s turnaround will weigh on the company’s profits. Shares fell about 6% in extended trading.Revenue in the quarter ending in December will be about $18.3 billion, in line with analysts’ average estimate. Earnings, excluding some items, will be 90 cents a share, Intel said Thursday in a statement. Analysts, on average, projected $1.02 a share. Gross margin, the percentage of sales remaining after deducting the cost of production, will be 53.5%. Investors are focused on whether Gelsinger can improve Intel’s products quickly enough to halt market share losses to rivals and defections by customers who are beginning to design their own components. Intel’s predictions add to concern that his efforts to make the chipmaker’s products and manufacturing more competitive will suppress its profitability. Shares of the Santa Clara, California-based company declined to a low of $52.37 in extended trading following the announcement. The stock closed at $56 in New York and has jumped 12% in 2021, lagging behind an index of semiconductor-related shares. When Gelsinger returned to Intel in February to take on its top job, he inherited a company that had lost leadership in the crucial area of manufacturing, which had been the keystone of its dominance of the industry for more than two decades. Gelsinger has pledged to take back leadership in that area. Third-quarter net income was $6.82 billion, or $1.67 a share, on revenue of $19.2 billion. Gross margin was 56%, compared with an average estimate of 55%, but still well below Intel’s typical margin of more than 60%. Sales, excluding a memory chip business that Intel is spinning off, were $18.1 billion, falling short of estimates.
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Gelsinger has pledged to spend to restore Intel’s leadership and build new factories that will be the basis of a new business offering outsourced production to other companies, even competitors. Intel’s stumbles and advances by Taiwan Semiconductor Manufacturing Co. have let others boast that they have processors that perform better than Intel’s, something that wasn’t possible during most of Gelsinger’s first tenure with the company. The 60-year-old originally joined the chipmaker as a teenager before leaving in 2009.
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