Intel shares fell 29% on Friday and were on track for their worst day since 1974, after the chipmaker issued weaker-than-expected guidance. CNBC reported that the guidance reflected a plant shutdown in Israel and ongoing softness in the PC market.
Intel said it expects adjusted earnings per share of 25 cents this quarter on revenue between $15 billion and $16 billion. Analysts had expected revenue of $17.1 billion and EPS of 43 cents, according to LSEG.
Intel finance chief David Zinsner said, "We see the PC slowdown continuing at least through the first half of next year." He said the Israel fab explosion will cost the company about $600 million in lost revenue over two quarters. CEO Lip-Bu Tan called the explosion, which killed two workers and seriously injured a third, an "unfortunate and tragic accident" that caused an "extended shutdown" at the plant.
The U.S. government holds a 10% stake in Intel, and the value of that stake dropped by about $12 billion on Friday, according to the report. Nvidia's stake is looking at a $6 billion drop, the report said. D.A. Davidson downgraded Intel to neutral from buy.
Other chip stocks also fell. Nvidia dropped 4%, Broadcom about 6% and Qualcomm 12%. The Nasdaq Composite slid more than 2.5%.
Tan said Intel has no external customers yet for its new chips but expects "a couple of customers" to be announced over the next two quarters.