Shares of Intel (INTC -8.42%) are tumbling on Friday, down 9.4% as of 3:06 p.m. ET. The move comes as the S&P 500 and the Nasdaq Composite gained 0.4% and 0.3%, respectively.
The chipmaking giant reported mixed earnings and painted a picture of a future that disappointed investors.
Intel beat revenue targets
The company beat Wall Street's targets for revenue in its latest quarter -- $12.9 billion compared to the consensus estimate of $11.97. It also set better-than-expected guidance for the current quarter, with a range set between $12.6 billion and $13.66 billion vs. the consensus estimate of $12.66.
Intel is changing direction
Despite these numbers, the company's strategic shift in its manufacturing left investors wondering what the company's future will hold. CEO Lip-Bu Tan wrote in a memo that "there are no more blank checks," explaining, "over the past several years, the company invested too much, too soon -- without adequate demand."
Image source: Getty Images.
Tan said that the company would not move forward with planned projects in Germany and Poland, and that it will slow construction of a site in Ohio. The company could entirely abandon its "pursuit of Intel 14A and successor nodes" and its next-generation manufacturing processes. Tan floated the idea that the company could turn instead to external foundries.
Intel has its work cut out for it
Given this news, it may take Intel longer to catch up to other chipmakers than investors had hoped. It raises more questions about Intel's path back to profitability. Though I think it could find its footing and return to competitiveness, this transition will be painful, and the stock could fall further. I would hold off for now.
