Short-circuited. 

Intel Corp. (INTC) - Get Report shares fell sharply lower Friday after the group said one of its key next generation chips wouldn't be released until next year and cautioned that profit margins may narrow in the second half of 2018.

Intel posted adjusted second quarter earnings of $1.04 a share, topping the consensus forecast of 96 cents and rising 44% from the same period last year. Total group revenues were also stronger-than-anticipated, rising 15% to just under $17 billion. However, sale of chips to data centers, which have a high profit margin than those sold to PC manufacturers, missed Street forecasts despite jumping 27% from last year to $5.5 billion. That figure, as well as the delay of its next generation 10mm chip and an expected uptick in sales of wireless-connecting modems to smartphone makers, pressured shares in after-hours trading following the earnings release.

"We're looking at an operating margin improvement by 1.5 to 2 points, so we see good solid op margin growth first half to second half," CEO Bob Swan told investors on a conference call late Tuesday. "The dynamics are the gross margin we expect to come down a bit and be more than offset by good volume leverage on a relatively stable spending base."

"So that trend of modest gross margin erosion more than offset by spending leverage driving op income improvement is the trends that you've been seeing for the last six to eight quarters, and we expect that to continue into the second half of the year," he added.

Intel shares were marked 8% lower in the opening 30 minutes of trading and were changing hands at $48.02 each, a move trims the stock's year-to-date gain to around 4% and values the Santa Clara, Ca.-based group at around $230 billion.

Intel's chief engineering officer, Venkata Renduchintala, told investors that the next generation 10-nanometer chip will likely come to market in late 2019 for consumer products, "with data center products to follow shortly after."

So as we look at 2019 across both the client and data center space, we feel very good about the product competitiveness of our 14-nanometer program, and that to some degree is factoring into our timing on 10-nanometer and launching 10-nanometer at a point in time where we believe the yields are at a level that make it prime for volume production," Renduchintala added.