When referring to Intel Corp. INTC, -1.09% right now, though, the standard definition of that phrase is more apt.
Last quarter, Intel executives lopped off $2.5 billion in revenue from its forecast, citing the trade wars with China, caution among CIOs who buy technology, and the high inventory issues in the chip industry. On Thursday, they added back $500 million to that forecast, yet still suggested the same uncertainty exists.
The market dynamics that led the company to lower its guidance in April “remain largely in place, although memory has continued to weaken relative to our expectations,” Chief Executive Bob Swan said Thursday afternoon.
The waffling on its annual forecast comes amid one of the most uncertain periods in the history of Silicon Valley’s most storied chip maker, which appointed Swan to CEO earlier this year after a long search for a replacement to his predecessor, who was shown the door. The forecast back-and-forth came as Swan made his biggest move yet to get Intel’s house in order, which only raises the question of what his next move will be.
Ahead of announcing second-quarter earnings, Intel announced it will sell its smartphone-chip business to Apple Inc. AAPL, +0.35% in a deal that values the unit at $1 billion. The deal has been expected since Apple dropped its worldwide legal battle against modem specialist and Intel rival Qualcomm Inc. QCOM, -0.17% , but Wall Street expects that Swan won’t stop there.
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Much of the speculation involves Intel’s memory business, which many expect could be next on the chopping block. In second-quarter returns announced Thursday, Intel did not see any improvement in that unit, with revenue down 13%. That type of performance could fuel rumors even more, despite the possibility that a sale could mean the loss of another manufacturing facility.
The tough decisions follow a tough time for Intel, which was beset with manufacturing issues last year from which it seems to be finally emerging. It was behind in its transition to a new 10-nanometer manufacturing process, and at the same time, it wasn’t able to make enough of its higher-end chips for PCs. At the same time, a semiconductor downturn, led by a high inventory of memory chips, added further pressure.
Overall, Intel’s data-centric business — which includes memory and data-center sales — saw revenue decline 7% from last year. The data-center business, once the company’s biggest growth driver, faces uncertainty and slower purchases by cloud-computing companies.
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“Although we have seen a weaker first half in our data-center business, we expect a better second half as demand from cloud and service providers improves and our second-gen Xeon Scalable continues to ramp,” Swan said, referring to Intel’s processors designed for servers and data centers.
Investors rejoiced over Intel’s higher revenue forecast, sending shares 5% higher in after-hours trading. But combined with the mixed signals in the call and the uncertain future for some business segments, there is little to feel confident about, at least right now. The clearest signal for investors may be one of caution and continued uncertainty for the chip industry.