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Intel Earnings Slip Despite Record Revenue

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Yahoo Finance’s Dan Howley joins the Yahoo Finance Live panel with the latest on Intel’s earnings slip.

Video Transcript

- Intel shares are in the red today, one of the biggest drags on the Dow, despite beating on its top and bottom lines. With results in the latest quarter out yesterday, that news was somewhat overshadowed by the way that news came out. The company moving up its release after the information the financial data there was reportedly hacked. Investors seem to be latching onto comments from incoming CEO Pat Gelsinger, who seemed to stress more outsourcing of chip protection will be coming at Intel.

For more on that, I want to bring I'm Yahoo Finance's Dan Howley to discuss that. And Dan, I mean, that was one of the issues we were-- we were thinking we were going to hear some more details about heading into the earnings call. But it seems like outsourcing is here to stay.

DAN HOWLEY: Yeah, it's actually interesting. So there's some comment where there would be outsourcing, but he also stressed that they want to continue their own production and fabrication facilities, and that kind of set people down on the wrong path. And obviously, that's why-- part of the reason why the stock is taking a hit.

I think most investors and analysts are looking for them to come out with a deal saying something along the lines with Taiwan Semiconductor, basically saying that they would have a fabrication deal in place with them. Taiwan Semiconductor obviously one of the largest semiconductor fabricators in the world. But Intel's Gelsinger basically said, look, we want to make sure that we have the capabilities to continue to produce our own chips.

And so they're going to double down on that, but it's going to cost billions of dollars for them to be able to do that. And so that, I think, is where you're getting this 1-2 punch the hack and Gelsinger's comments.

But he also was positive on the company's 10 nanometer process chips that they're working on. 7 nanometer and 5 nanometer still off in the future, and that's something that they need to work on. Because if they're going to build out their fabrication capabilities more to keep up with what other competitors are doing, they really need to make sure that their technology is there.

And it just isn't. And that's why AMD has been managing to beat them, and why you're seeing people grumbling that Intel has fallen off. They don't have those widespread 7 nanometer chips. They don't have 5 nanometer chips.

And we're already seeing those in the likes of Apple's new Mac M1. That's something that Intel just can't do right now, and that's why Apple seemed to want to lead them. But this appears to be a 1-2 punch, to hack and the idea that they want to continue to build out their own chip manufacturing capabilities.