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Intel Falls as Outlook Shows Costly Path to Regain Dominance

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Intel CEO Pat Gelsinger.

Intel CEO Pat Gelzinger has pledged to improve quality and build factories that will be the basis of a new business offering outsourced production to other companies, even competitors.


Intel Corp. Chief Executive Officer Pat Gelsinger spelled out the cost of his drive to return the world's largest chipmaker to leadership of the industry and investors weren't pleased. Shares were down 10% in premarket trading.

Executives said profitability will suffer during the next few years because of increased spending on the company's manufacturing technology. Near term, if Intel's fourth quarter comes in as the chipmaker projects, sales will decline 3% from a year earlier, gross margin will drop 6.5 percentage points and earnings per share will fall about 40%.

Investors are focused on whether Gelsinger can improve Intel's products quickly enough to halt market share losses to rivals and defections by customers who are beginning to design their own components. Intel's outlook adds to concern that his efforts to make the chipmaker's products and manufacturing more competitive will suppress its earnings.

From Bloomberg
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