Half a year without a CEO and a decrease in iPhone sales: why Intel shares are falling

In June 2018, Intel CEO Brian Krzhanich was forced to leave his post. The reason for the dismissal were the results of an internal investigation, which showed that the director had a personal relationship with one of the employees, which is prohibited by Intel's internal rules. Krzhanich was forced to leave the board of directors of the company.

More than half a year has passed, but Intel has still not announced the successor to Krzhanich, while the former general director himself quickly found a new job . The position of CEO is temporarily performed by the Chief Financial Officer of the company Bob Swan. And despite his experience, the company's financial affairs are not very good due in large part to the problems of one of its main customers, Apple, which was faced with a drop in iPhone sales.

What are the problems of intel

This week the company published a sales report - they were lower than expected. Analysts assumed that revenues would be at the level of $ 19.01 billion, while the real numbers did not exceed $ 18.66 billion. This led to the fact that during the trading on Thursday January 24, Intel shares collapsed by 8%.

Investors were also embarrassed by the explanation of the company - in a statement, it stated that revenue increased by 9% compared with the end of the last quarter of 2017. At the same time, there was no official information about the search for a new CEO.

During an open call with analysts, Swan limited himself to general words: “The board of directors continues to evaluate candidates for, in my opinion, the best job in the world. They understand the importance of resolving the issue soon, but must take into account all the interests of the company in order to make the best choice. ”

What does Apple have to do with it?

At the presentation of the earnings report, Intel representatives acknowledged that the market situation for the company has recently deteriorated - largely due to the slowdown in economic growth in China and the "decline in demand in the smartphone market." Intel supplies mobile processors for smartphones - the revenue of this line of business was $ 200 million less than expected.

One of the main buyers of such chips is Apple - Intel products are installed in the Phone XS, XS Max and XR models. IPhone sales are slowing in recent months due to declining demand. Possible losses Apple estimated at $ 9 billion, and this situation hurts the main suppliers of the company.

Correction Plans

According to Intel management, the company will take a number of measures to remedy the situation. In particular, in 2019, construction of new production facilities will be launched in the United States and other countries - this will ensure supplies in those product segments where high demand remains.

In addition, in the fall of Intel announced a new line of processors for desktop computers. The start of sales of new chips is expected in the first quarter of 2019.
Intel will also remain the main supplier of processors for Apple for at least another year.

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