Intel's (INTC - Get Report) first-quarter earnings beat analysts' expectations but shares of the chipmaker tumbled in premarket trading after its outlook for the second quarter came in well shy of forecasts.
Intel said it expects second-quarter adjusted earnings of 89 cents a share on revenue of roughly $15.6 billion - analysts were expecting earnings of $1.01 a share on revenue of $16.86 billion.
The company said it expects adjusted earnings for the year of $4.35 a share on revenue of $69 billion. Analysts had been calling for profit of $4.50 a share on revenue of $71.04 billion.
Adjusted earnings in the first quarter were 89 cents a share, beating estimates by 2 cents, as revenue of $16.1 billion slightly beat forecasts.
But sales in Intel's data center group division fell 6.3% to $4.9 billion, below expected revenue of $5.1 billion. It was the first quarterly sales decline in seven years for data center chips.
Intel said revenue in its largest segment - client-computing - rose 4% to $8.6 billion vs. expectations of $8.38 billion.
"Our conversations with customers and partners across our PC and data-centric businesses over the past couple months have made several trends clear," Intel CEO Bob Swan said on a conference call Thursday.
"The decline in memory pricing has intensified, the data-center inventory and capacity digestion that we described in January is more pronounced than we expected, and China headwinds have increased, leading to a more cautious IT spending environment," the CEO added said. "And yet those same customer conversations reinforce our confidence that demand will improve in the second half."
The stock was down 8.8% on Friday to $52.56.