Jan 26 (Reuters) - Intel Corp (INTC.O) said on Thursday it expects to lose money in the current quarter, surprising investors with a bleaker-than-expected outlook for both the PC market and slowing growth in its key data center division.
The company's shares fell 9.5% in trading after the bell.
"We stumbled, right, we lost share, we lost momentum. We think that stabilizes this year," Chief Executive Pat Gelsinger told investors on a conference call. He said Intel has been losing market share in the data center market, a nod at the strength of rival Advanced Micro Devices (AMD.O)
Two of Intel's most important markets are showing weakness after two years of strong growth as remote work boomed during the pandemic. Now, the PC industry is struggling with a glut of chips after demand for consumer electronics fell off a cliff and business customers wary of a recession are slowing spending on data centers.
Gelsinger told Reuters that customers also were emptying inventory.
"We expect some of the largest inventory corrections literally that we've ever seen in the industry taking place that's affecting the Q1 guide in a meaningful way," he said.
"Everything hinges on the PC market recovery. AMD isn’t immune to this either," said Wayne Lam, an analyst at CCS Insight. "Don’t think we’ve seen the bottom for INTC...They are not running a sustainable business model."
Intel expects profit margins to fall further after dropping from 58.4% in the fourth quarter of 2020 to 43.8% in the fourth quarter of 2022. "Its safe to say that ambitions to return to a 60% margin in the future is light years away," said CFRA Research analyst Angelo Zino.