Shares of Intel slid drastically on Wednesday, as investors reacted to the company's less-than-stellar earnings report for the third quarter.
Intel's stock slid more than 18 per cent to a close of $US13.54 on the Nasdaq exchange. The drop comes one day after the chip maker announced third-quarter earnings that were below analysts' expectations. Company executives also warned that fourth-quarter revenue is likely to fall below last year's levels for the same quarter.
Intel expects to post fourth-quarter revenue of between $US6.5 billion and $6.9 billion. The company reported $6.98 billion in the same period a year ago.
"We see the possibility of modest growth in the fourth quarter as the pace of economic recovery continues to define our outlook," said Andy Bryant, Intel's chief financial and services officer, during the company's third-quarter earnings press conference on Tuesday.
On Wednesday, 154 million Intel shares changed hands, well over twice the average volume. Financial analysts had been expecting a third-quarter profit of $0.13 per share, according to research company First Call/Thomson Financial.
Intel sold more microprocessors during the quarter than in the previous three months, but the average selling price of those processors was slightly lower. That's because Intel gained share in the low-cost PC market, which shifted Intel's "product mix" toward lower-priced chips, said Paul Otellini, Intel's president and chief operating officer, in a press conference to discuss the results.
Revenue from its microprocessor group remained more or less flat compared to a year earlier, at $US5.4 billion, the company said. Although it shipped more desktop chips during the quarter, volumes were down for both notebook and server processors, due to continued weak corporate spending and a sluggish back-to-school season, Otellini said.
Intel also saw growth in its wireless group, where revenue increased to $US586 million, from $509 million a year earlier. Sales of flash memory chips increased, driven partly by the emergence of feature-rich phones that have colour screens and built-in digital cameras, Otellini said.
However, the gains from its wireless group were offset by slow sales from its communications group, where slack demand from carriers and for networking equipment reduced revenue to $US482 million, from $580 million a year earlier, the company said.